Anyone in business knows the importance of return on investment (ROI). Of all the metrics we use to evaluate our finances, ROI is particularly effective because it compares the two most essential financial transactions – what you pay out, and what you get back as a result.
It is no surprise that many business owners look to measure ROI when it comes to their online activity. If you are paying a recurring fee for web hosting services, a virtual private server, or even a dedicated server plan, you probably want to know how much revenue comes into your business as a result.
But ROI on web hosting is incredibly difficult to measure accurately. In fact, it may be more productive to look at hosting fees as a completely different type of cost.
In this article from affordable web hosting provider JaguarPC, you will learn the easiest way to measure the return on your hosting investment. More importantly, you will find out why the act of measuring web hosting ROI does not accurately reflect what a professional hosting plan does for your business
If you are serious about running a profitable business but concerned about the money you spend on hosting, read on.
Measuring web hosting ROI is easy
There is no doubt that measuring the return on your investment on web hosting is possible. In fact, it is surprisingly easy to do on a very basic level.
When measuring web hosting ROI, you will need to be able to find out where your sales revenue is coming from. If you run an ecommerce web site, you can immediately see all the transactions that occur online. In addition, try to track leads that come to your business via your website and include sales from these customers.
Once you have gathered your financial transactions over a specific period of time (for example, a quarter of the year):
- Find the total amount you spent on hosting services, including overage charges on top of your recurring bill. This is your investment.
- Find the total sales revenue through your website, including direct sales (through your online shopping cart) and leads (customers who contacted you through your website and later placed an order by any means). This is your return.
- Subtract your investment from your return, and divide this figure by your investment. Then, multiply the result by 100 to see your ROI as a percentage.
A simple example makes this calculation clearer:
- In six months, John spent a total of $149.70 on hosting
- In the same six months, John generated $1,000 of sales revenue through his web site
- His return on investment is ($1000-$149.70)/$149.70 x 100 = 568%
This is an excellent return on investment. However, it is not entirely accurate.
A website could cost more than just your hosting
The first reason that calculating ROI on web hosting is problematic is your web hosting alone does not generate revenue. Until you fill your web hosting space with rich, attractive content and possibly some ecommerce software
, it will not generate one cent of income.
In many cases, business owners spend additional funds on web development and design. You may even be investing money into marketing designed to drive content to your website. If so, you should take this spending into consideration whenever you work out how much return your investment on hosting delivers.
Of course, this causes yet more confusion. If you spend $1,000 on web development when you first launch your website, how much revenue can you say comes as a result of this expense? In addition, if you do your own design or conduct your own online marketing, how can you account for an ongoing investment of time?
The broad costs of web hosting, website design, and online marketing make calculating your investment more difficult. As a result, your ROI calculation will be less accurate.
What tangible return does your website deliver?
If calculating the overall cost of your web hosting and website is difficult, calculating your total web-related revenue is almost impossible.
When a website is used as a sales channel, your ecommerce platform will allow you to see all your revenue at a glance. However, this only accounts for one function of a website.
Any successful website does multiple things at once:
- Processes sales
- Informs customers about your products and services
- Attracts customers to your business and persuades them to make a purchase
- Builds your brand reputation
- Acts as a point of contact and support channel for existing customers
In addition, a web hosting plan will also support your email for both internal and external communication
With so many concurrent processes, measuring the returns a website generates means considering multiple factors at once. Many of these factors, such as building your brand reputation, cannot be converted into any financial metric.
Every business owner knows their website delivers multiple benefits across several areas of the company. From marketing and sales to support, a web hosting plan gives sizable returns, but they are often unable to be measured.
A web hosting service is a utility
In this article, you have seen how complex the idea of calculating web hosting ROI can become. So how do you go about measuring the return your website gives you in accurate financial terms?
The answer is you do not need to.
The best way to see a web hosting plan is as a utility of modern business
. In many ways, the money you spend on hosting is like the money you spend on electricity.
Hosting is essential for any enterprise, not as a direct source of revenue, but as a fundamental tool of business. As you attempt to measure the return on your investment, perhaps the best thing to do is consider if you would have a business at all without your hosting plan.
Increase your return with web hosting from JaguarPC
Maximizing the return on investment you achieve from your web hosting plan is about more than getting the lowest price. In addition to looking for an affordable hosting service, you need a range of impressive features that add value to your plan and deliver those returns that are more difficult to measure.
JaguarPC offers shared web hosting, virtual private servers (VPS hosting), dedicated servers, and hybrid server solutions, with substantial discounts for long-term contracts paid in advance.
Each plan also comes complete with the features you need to get the most from your hosting, including client billing software, automated site builders and much, much more.
For more information on web hosting plans from JaguarPC call 1-888-338-5261 or visit jaguarpc.com