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02 May / Website Gross Profit

 

Livonia Tax Prep

 

So are you trying to build your website retail presence.  First we need to do is run the numbers.  But we need to work backwards. First things first.  What is your average internet sale amount? For the sake of conversation let us assume it is $60.00. And secondly you would like to see an additional 10 sales per day.  So in other words, $600 dollars per day $3,000 per week and $156,000 per year. Your gross profit margin is 30% so you hope to ad an additional $46,800 to the bottom line annually.

As a general rule of thumb only 2% of visits to a website result in a sale. In other words, for our example we would need 500 hits per day in order to get 10 sales. And as another rule of thumb, in order to get 500 hits per day you need 25,000 views per day. So now the hard part.  How do we get 25,000 to see us on a daily basis. Of course we need to have a presence on facebook, twitter, google+, and proper SEO of course at a minimum.

But what does that cost. If we can expend 7% of our projected revenue to get this type of traffic then we would probable goo ahead with it. But we have to take into consideration how long it will take us to get to that magic number of 25,000 view.  If it takes a year then it probable makes sense still as long as the cash is available to do this. If it takes two years then the numbers still support the activity but at that point if 25,000 views may not be worth the 7% budget.

So before you go and expend in order to increase your web traffic be sure to know how long it will take you to get to your target view number.

 

 

 

 

Tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

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By Jschultz in Accounting, Tax-Preparation
    So are you trying to build your website retail presence.  First we need to do is run the numbers.  But we need to work backwards. First things first.  What is your average internet sale amount? For the sake of conversation let us assume...
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