How to Calculate Marketing Percent Revenue

by Michael Batton Kaput
Advertising can get expensive, so it's important to measure its costs and benefits.


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With so many ways to market your product, including online tools and social networking websites like Facebook MySpace and Twitter, it can sometimes seem like you are getting marketing for free. However, rarely can you get something for nothing in the modern business world. The importance of calculating the return on your marketing efforts expressed as a percentage of your company's revenue or profit stream cannot be overstated. Once you know what kind of return on investment you're getting, you can tailor your advertising efforts accordingly.


Tally the total financial cost of your investment in your marketing efforts.


Calculate the gross profit you made on the marketed product or service. Some people choose to calculate the marketing return on investment using a product's gross revenue. However, this can distort your return on investment numbers. Gross profit is a more accurate barometer. Gross profit is the amount left over when you subtract your overhead costs from your gross revenue.


Subtract the cost of your marketing investment from your gross profit. This is the base rate of your return on investment.


Divide your return on investment by the cost of your marketing investment that you used in Step 1. This is the factor of return on your investment. For instance, if your return on investment was $9,000 and your marketing investment was $1,000, your return on investment was nine times the initial investment.


Convert the return to a percent. Move the decimal point two places to the right. For a whole number, the decimal point (even if not displayed) is to the right of the number. So a return on investment nine times more than the initial investment is, as a percent, a 900 percent return on investment.

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