Volume of orders and revenue
Posted: Sat Jan 18, 2025 6:57 am
Many people mistakenly believe that the volume of orders is always equal to the volume of revenue, but these indicators should not be confused.
The order volume is the total amount of transactions concluded between the company and the customer. It indicates the amount that the customer must transfer to the company in accordance with the contract.
The revenue volume is calculated after the fulfillment of obligations to provide the service or for the established period of its provision. Its calculation is carried out in accordance with the requirements of accounting.
Announcement of plans or informal advertising data package agreements do not in any way affect the volume of orders, nor the volume of revenue.
Recommended articles on this topic:
Absolutely Free Internet Advertising: 19 Options
32 methods of finding and attracting clients
B2B Marketing: Key Features, Promotion Channels
Outflow volume
Churn is characterized by different indicators: decrease in profit, net profit churn, customer withdrawal. Also, appropriate methods are used to measure them. In particular, sometimes the annual revenue is taken as a basis, taking into account the growth of sales and customer withdrawal.
It is important for investors to know the indicators calculated as follows:
Monthly unit churn = number of lost customers/total number of customers in the previous month.
6 Business Metrics for Monetization
CPO
The CPO indicator (cost per order, the price of attracting one sale) characterizes the average amount of expenses incurred to attract one buyer. By determining the CPO for all promotion channels, it is possible to optimize the advertising budget in future periods.
CPO = amount of money spent on advertising/number of sales.
CAC
CAC (customer acquisition cost, price per customer) is the funds allocated by a company to attract a new customer within a certain period of time.
CAC = total amount spent on traffic channels and sales for a certain period of time / total number of attracted customers.
The value of this indicator can be difficult to determine, since it is impossible to say with certainty how much it cost the company to attract new clients.
ROI, ROMI, ROAS
ROI (return on investment), ROMI (return on marketing investment) and ROAS (return on advertising spend) allow you to find out how much you can get back your investment. The difference is that ROI characterizes the overall profitability taking into account all costs.
ROI = ((income received from the project - expenses on this project) / expenses on this project) * 100%.
If the ROI indicator is expressed as a positive number, we can conclude that the project is profitable. If the ROI value is negative, the enterprise's activity is associated with losses. If the ROI is zero, then the business is at the break-even point.
Key Business Metrics
Source: shutterstock.com
Usually, when calculating the return on investment, a simplified formula is used that includes only marketing costs, without taking into account rent or delivery costs. The ROMI indicator includes only funds allocated for marketing purposes. At the same time, this includes not only the cost of advertising, but also the marketer's salary.
ROMI = (advertising revenue - total marketing costs
The order volume is the total amount of transactions concluded between the company and the customer. It indicates the amount that the customer must transfer to the company in accordance with the contract.
The revenue volume is calculated after the fulfillment of obligations to provide the service or for the established period of its provision. Its calculation is carried out in accordance with the requirements of accounting.
Announcement of plans or informal advertising data package agreements do not in any way affect the volume of orders, nor the volume of revenue.
Recommended articles on this topic:
Absolutely Free Internet Advertising: 19 Options
32 methods of finding and attracting clients
B2B Marketing: Key Features, Promotion Channels
Outflow volume
Churn is characterized by different indicators: decrease in profit, net profit churn, customer withdrawal. Also, appropriate methods are used to measure them. In particular, sometimes the annual revenue is taken as a basis, taking into account the growth of sales and customer withdrawal.
It is important for investors to know the indicators calculated as follows:
Monthly unit churn = number of lost customers/total number of customers in the previous month.
6 Business Metrics for Monetization
CPO
The CPO indicator (cost per order, the price of attracting one sale) characterizes the average amount of expenses incurred to attract one buyer. By determining the CPO for all promotion channels, it is possible to optimize the advertising budget in future periods.
CPO = amount of money spent on advertising/number of sales.
CAC
CAC (customer acquisition cost, price per customer) is the funds allocated by a company to attract a new customer within a certain period of time.
CAC = total amount spent on traffic channels and sales for a certain period of time / total number of attracted customers.
The value of this indicator can be difficult to determine, since it is impossible to say with certainty how much it cost the company to attract new clients.
ROI, ROMI, ROAS
ROI (return on investment), ROMI (return on marketing investment) and ROAS (return on advertising spend) allow you to find out how much you can get back your investment. The difference is that ROI characterizes the overall profitability taking into account all costs.
ROI = ((income received from the project - expenses on this project) / expenses on this project) * 100%.
If the ROI indicator is expressed as a positive number, we can conclude that the project is profitable. If the ROI value is negative, the enterprise's activity is associated with losses. If the ROI is zero, then the business is at the break-even point.
Key Business Metrics
Source: shutterstock.com
Usually, when calculating the return on investment, a simplified formula is used that includes only marketing costs, without taking into account rent or delivery costs. The ROMI indicator includes only funds allocated for marketing purposes. At the same time, this includes not only the cost of advertising, but also the marketer's salary.
ROMI = (advertising revenue - total marketing costs