ROI vs ROAS | which one to track for business success? |Ep.#10
Description
Here is the calculation mentioned in the podcast. See this and parallelly listen, to understand even more better.
Spent on fb ads = $10,000
Revenue generated = $50,000
ROAS = Total campaign revenue/Total campaign cost = $50,000/$10,000 = 5x
ROI = Net profit*100/net spent
Netprofit = Total revenue - Total expenses
Now substitute this in the formula of ROI
ROI = (Total revenue - Total expenses)*100/Net spent
As we took margin as 15%, now use that in total revenue place.
Now substitute the values in the ROI formula above.
ROI = ($50,000*15%)-$10,000*100/$10,000 = -25%
This is how you need to calculate ROAS and ROI.
I hope this helps.
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