Seattle SEO Tips – Calculating Your SEO Budget Using Anticipated ROI

 

If you’re planning on starting an SEO campaign, or hiring a Seattle SEO company to do it for you, then you need to know how much you can afford to spend on it. Your anticipated ROI (return on investment) is the easiest way to make that decision because it shows you how much you can expect to make in return. Unfortunately, you cannot estimate exactly how much you can earn, but you can find your anticipated ROI, which is how much you should make.

Finding your Average ROI

To find your anticipated ROI, you have to know a few things about your website.

  • How Much Traffic Do You Get Each Month?
  • How Many Sales Do You Make Each Month
  • How Much Does Each Sale Generate in Profit Revenue

These questions are a little more complex than they seem at first, especially because sales and value do vary depending on the item. For example, if you have 200 items varying between $1 and $200 each, then your value per sale can fluctuate a great deal. However, if you make 500 sales per month and earn $17,500 then your average value per sale is a median of $35. While this might vary per month, you can also do it per year. If you made $210,000 in sales in 2013, and roughly 6,000 sales, then your average sale value is still $35. For traffic, try using Google Analytics, or your analytics program of choice.
Profit Revenue is important because it suggests how much you actually make rather than perceived profit. If you’re only raising the price of your items 40% up from what you’re spending to make them then your profit off of $210,000 in sales is only $84,000.
Finally, you have to calculate your average conversion rate. If you have an average of 7,000 visitors per month and make 500 sales per month, then you have a 7.14 percent conversion rate.

How to Use Your Anticipated ROI

If you use the numbers listed above:
7,000 visitors = 500 sales = $17,500 = $35 per sale with a $14 profit off of each sale

Then you could estimate that if you drive 100,000 visitors to your website with a 7.14 percent conversion rate, then you could theoretically drive 7,139 sales. At the same profit margin rates listed above, that would make for $249,865 in generated sales or $9946 in actual profit. So, your SEO budget would have to be $9,900 or less in order to break even.

Because you want ‘ROI’, return on investment, rather than breaking even, your SEO budget should be around $5,000, which is where most good SEO campaign managers start their prices. Of course, you can scale up or down depending on your budget, your goals, and your ROI. Plus, if your sales generate around $100 in profit, you have to push far fewer sales in order to get a positive ROI.

Variables

One important thing to remember about SEO is that it can drive a great deal more traffic than estimated. You don’t always ‘get what you pay for’, because while 100,000 people might click on your website, the same could be said of 500,000 people. In addition, sometimes SEO depends on other factors, such as Google updates, competitors, and current ranking. If you want a real estimate of what your Seattle SEO manager can do with your budget, make sure that you talk to them first.

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