Perform unit economics/ROI/ROMI calculation

To do this, follow these steps:

1. define a unit;
2. calculate the amount of profit/loss it generat , – this takes into account all the expenses and income associat , with it.

To form a marketing budget, it is necessary to understand what the company gets from one unit: a positive result or losses. If it phone number list makes money on it, it is time to scale up, spending more money on promotion and increasing profits. If the unit economics are negative or “do not add up,” changing the size will cause an increase in losses.

If you find it easier to work with ROI/ROMI, use this approach. The main thing is to remember to count.

Select goals and match them with your budget

So, we know that the unit brings in amounts that exce , its costs. Now, theoretically, a marketing budget of any size will be profitable for the company. In practice, everything is more complicat ,, since there are a number of restrictions:

• Different channels production cycle: how to calculate and reduce its duration use different economics. It is highly likely that everything converges on social m ,ia traffic, but this cannot be achiev , with a website.
• Restrictions on production, storage, etc. There is no point in selling 100 sofas if there are only 10 left in the warehouse, and b2b reviews the company can produce no more than 20 in a month.
• Cash flow restrictions. Sales funds are always delay ,, while some suppliers require payment in advance – we will discuss this topic in more detail later.

When preparing a marketing budget, it is important to rely on goals . To do this, in an Excel file, list months/quarters/years in accordance with the requir , planning horizon, specify the goals for transactions. Then calculate the budget, taking into account sales channels and seasonality.

You already have all the tools: the cost of attracting a unit, calculat , in the previous step, and the total cost, that is, the marketing budget itself. It remains to compare the benchmarks, get confirmation that the company can handle such volumes, and the financial plan will be ready.

To link goals to your marketing budget:

• Use Excel, every marketer’s favorite tool, and record your sales goals in a spreadsheet.
• Compare the figures with the indicators of production, warehouse, and other sources of goods that are relevant to your company.
• Calculate promotion costs bas , on unit economics.
• Add 10-20% or another percentage for PR, offline promotion and other expense items.
• Set aside funds to build statistics if you don’t have them yet.
• Make sure that the resulting plan will not lead to the bankruptcy of the company.

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Although it seems like there is nothing complicat , here, many companies cannot tell where they are losing and how they are making money. The manager only has the general picture – he understands whether the company is profitable or not.

To avoid getting into a similar situation, it is important to have an idea of ​​the rules of calculation and analysis.

Collect information and conduct analysis

The marketing budget is easy to calculate if the unit economics/ROI and the plann , results of the enterprise are known.