Your client’s product costs US$50 to produce, and it sells for US$150. She’s sold 10 units and spent US$700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?

QUESTION

Your client’s product costs US$50 to produce, and it sells for US$150. She’s sold 10 units and spent US$700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?

[US$1500 (revenue) – 10(number of products sold)]/US$1200(cost + AdWords spend)

US$1500 (revenue)/US$1200(cost + AdWords spend)

[US$1500 (revenue) – US$1200(cost + AdWords spend)]/US$1200(cost + AdWords spend)

[US$1500 (revenue) – US$1500(cost)]/US$700(AdWords spend

The correct answer is:

US$1500 (revenue)/US$1200(cost + AdWords spend)

Your client’s product costs US$50 to produce, and it sells for US$150. She’s sold 10 units and spent US$700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?
Explanation:

ROI is the ratio of your net profit to your costs. To calculate ROI, take the revenue that resulted from your ads, subtract your overall costs, then divide by your overall costs: ROI = (Revenue – Cost of goods sold) / Cost of goods sold.

Read more here: https://support.google.com/adwords/answer/14090?hl=en

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Your client’s product costs US$50 to produce, and it sells for US$150. She’s sold 10 units and spent US$700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?
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