Did that marketing campaign pay off?
Enter what a campaign cost and how people responded. You'll see the profit it actually produced and the return on every dollar.
A campaign paid off when the gross profit on the revenue it produced is larger than what it cost to run. Revenue alone isn't the test — apply your margin first, then subtract the full spend.
The math
How this works
How do you calculate marketing ROI for a small business?
Return on a campaign is the profit it produced measured against what it cost, and the word profit is doing the work. Count every cost of the campaign, including design, software, printing, postage, and media spend. Then follow the responses through to paid sales, multiply by what those customers spent, and take out the cost of delivering that work using your gross margin. What remains, minus the campaign cost, is the profit the campaign added. Dividing that by the cost gives you a return you can compare against the next campaign, which is more useful than comparing revenue figures that ignore what each sale cost to fulfill.
What is a good cost per new customer?
There is no universal number, but there is a way to judge yours. Compare the cost per new customer against the gross profit that customer produces, first on the opening purchase and then across the relationship if they come back. If a new customer costs more to acquire than their first purchase earns you, the campaign only works when people stay, which makes retention part of the marketing decision rather than a separate topic. Calculate the lifetime value of a customer first, then read your cost per new customer against it. The same campaign can be a bargain for a business with repeat customers and a loss for one selling a one-time service.
Why does gross margin matter when measuring a campaign?
Because revenue is not what you keep. If half of every sale goes to materials, labor, and card fees, then a campaign that brings in revenue equal to its cost has lost you money. Applying your margin before comparing to spend is the step that separates campaigns that looked successful from campaigns that were. It also changes which channels make sense, since a high-cost channel can still work for high-margin work and a cheap channel can fail for thin-margin work. Use the margin on what the campaign actually sold, not your average across everything you do.
Questions people ask
Should I include my own time in the campaign cost?
It depends on what you are deciding. For comparing one channel against another, out-of-pocket cost is usually enough and keeps the comparison clean. For deciding whether to run the campaign at all, put a value on your hours, because a cheap campaign that eats a week of your selling time is not cheap.
What if I cannot tell which customers came from the campaign?
Then the result is a guess, and the fix is to set up tracking before the next one. An offer code on the mailer, a dedicated phone number, a landing page used only by that campaign, or a staff habit of asking how people heard about you will each give you something to count. In the meantime, use only the customers you can confidently attribute and treat the result as a floor.
Does this account for repeat purchases?
No. It measures the first purchase, which is the right way to judge a single campaign against its cost. If customers typically come back, the campaign is worth more than this page shows, and a lifetime value calculation will put a number on the rest.
What does the break-even conversion line tell me?
It shows the conversion rate at which the campaign would have exactly paid for itself, given your costs, average purchase, and margin. It is useful before you spend, as a sanity check on whether that rate looks reachable from what you have seen before, and useful afterward as the yardstick for how close a disappointing campaign came.
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This is an estimate to help you think, not financial, tax or legal advice. Finli is not a bank and does not lend. Your own numbers, and your banker, beat any calculator.