How the math works
- Cost = pieces × (printing + postage per piece) + any one-time costs such as design.
- Responses = pieces × response rate.
- Sales = responses × close rate.
- Gross profit = sales × profit per sale.
- ROI = (gross profit − cost) ÷ cost.
Use profit per sale, not the sale price. A $1,000 job that costs you $600 to deliver earns $400 toward the mailing.
Use your own response rate
The response rate is the number everyone wants to look up. Don't. It varies too much by list, offer, area and business to borrow from someone else. Use the table under the calculator to see the range where your mailing pays, then mail and measure to find your real rate.
Lifetime value
One job may not pay for a mailing, but a customer who comes back for years can. If you know roughly what a customer is worth over time, use that as the profit per sale to see the longer-term picture. Just be honest about it.
Questions
How do you calculate direct mail ROI?
Take the gross profit from sales the mailing produced, subtract the full cost of the mailing, and divide by that cost.
What's a good ROI for direct mail?
Any positive ROI means the mailing paid for itself. How much you need depends on your business. Track it across several mailings rather than judging one.
Should I include design costs?
Yes, in the mailing they were made for. If the design gets reused, you can spread it across the mailings that use it.