Figuring out whether you’ll make money online

Return on investment(ROI) looks at the rate at which you recover your investment in site development or marketing. Often you calculate ROI for a period of a year. To calculate ROI, simply divide profits (not revenue) by the amount of money invested to get a percentage rate of return:

profits ÷ investment = rate of return

You can also express ROI by how long it will take to earn back your investment. An annual 50 percent ROI means it will take two years to recover your investment. As with acquisition costs, you can compute ROI for your original investment in site development, for any single marketing campaign or technique, or across an entire year’s worth of Web expenses.

Don’t spend more on marketing than you can make back. Losing money on every sale is not a good business plan.

Now, go have some fun and make some money online!

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