The Return on a Website, Calculated Honestly

Why the usual figure is wrong

The common calculation takes revenue from customers who visited the site and divides by what the site cost.

It produces an impressive number and it counts a great deal of business that would have arrived regardless.

A customer who was referred by a friend, looked you up to check you were real, and then phoned, is a referral rather than a website enquiry. The site helped, and it did not generate the work.

Counting that as website revenue inflates the figure to the point where it means nothing, and it is the reason most reported returns on small business websites are not believed by the people receiving them.

Count what would not have happened

The principle that makes the number defensible.

Ask of each enquiry whether it would have reached you without the site.

Somebody who searched for the service, found you among strangers, and made contact would not have. That is attributable.

Somebody who was given your name and looked you up is a referral you might have lost without a credible site, which is real value and is not new business.

The honest treatment is to count the first group fully and to treat the second as protective rather than generative, mentioned separately rather than added in.

Use margin, not revenue

The correction that changes the answer most.

A job worth ten thousand in revenue at a twelve percent margin contributes twelve hundred, and comparing revenue against cost overstates the return by a factor of eight.

Use gross margin, or contribution, or whatever figure your accountant would recognise as what the job actually left you.

For service businesses where the main cost is your own labour, be honest about whether the work displaced other work you would have done anyway, because a fully booked business taking a new job at the expense of an old one has gained the difference rather than the whole.

The calculation

• Enquiries attributable to the site, over a period.
• Multiplied by your close rate on those enquiries.
• Multiplied by average margin per job, not revenue.
• Minus the build cost spread over its useful life.
• Minus annual running costs.
• Minus your own hours, valued at something.

The last two are routinely omitted and together they are frequently a third of the true cost.

Spread the build cost properly

A point that makes the figure fair rather than flattering in either direction.

A site costing a certain amount and lasting four years should be counted at a quarter of that per year, in the same way you would treat any other asset.

Charging the whole build to year one produces a terrible first-year figure and an artificially excellent second year, which tells you nothing.

Four years is a reasonable default for a small business site. If yours is genuinely rebuilt every two, use two, and notice that the shorter life is itself a cost.

A worked example

A contractor wanted to know whether their site had been worth it.

The flattering version counted every customer who had visited the site: substantial revenue, an apparently enormous return.

The honest version started differently. Over twelve months, thirty-one enquiries had come through the site. Asking how people found them showed nineteen were referrals checking them out, and twelve had found them by searching.

Of those twelve, seven became jobs. Average job margin was around eighteen hundred, giving roughly twelve thousand six hundred.

Against that: the build spread over four years, hosting and domain, and about thirty hours of the owner's time on content and updates.

The result was a genuine positive return of a few thousand in the year, plus nineteen referrals who had been reassured.

Less impressive than the first figure and defensible to anybody, which was the point of doing it.

Asking how they found you

The input the whole calculation depends on, and the cheapest data available.

Analytics cannot distinguish a referral who looked you up from a stranger who searched, because both arrive the same way.

Only the customer knows, so ask, at the point of enquiry, and write down the answer in whatever you already use.

Ask it openly rather than from a list, since a list produces the option nearest the top and open wording produces the actual route.

Three months of that gives you a split you can apply to the year, and it is more accurate than any attribution model you could buy.

Payback, not just return

A more useful framing for deciding whether to spend again.

Payback asks how long before the site covers its cost, which is a question a small business owner can act on.

A site paying for itself in eight months is clearly worth repeating. One taking four years is roughly breaking even over its life, which means the money would have done more elsewhere.

Calculating it also forces the honest inputs, because a payback period computed from inflated revenue produces an obviously implausible answer.

Work it out at twelve months rather than at launch, since the first three months are unrepresentative in both directions.

What the number cannot capture

Worth stating so the calculation is not overweighted.

The reassurance effect on referrals, which is real, protective, and hard to quantify.

Enquiries you never received because somebody looked and left, which are invisible by definition.

Time saved answering questions the site now answers, which is a genuine cost reduction that never appears as revenue.

And the effect on price: a business that looks established can charge more, and that shows up in margin rather than in enquiry volume.

Note those separately rather than trying to force them into the figure, which is how honest calculations become dishonest.

The counter-case

There is a version of this rigour that becomes unhelpful.

A small business spending a modest amount on a site does not need a formal return calculation, and producing one costs attention that would be better spent on the work.

Some sites also exist for reasons that are not commercial in this sense: a professional obligation to publish information, a recruitment purpose, or simple credibility in a sector where absence is disqualifying.

And a first site for a new business has no baseline to be measured against, since there was no before.

Calculate it when a decision depends on it: whether to rebuild, whether to spend more, or whether a supplier is earning their fee.

Doing it

1. Ask every enquirer how they found you, openly.
2. Split referrals from strangers over three months.
3. Count only attributable enquiries.
4. Apply your close rate and average margin.
5. Spread the build cost over its useful life.
6. Include running costs and your own hours.
7. Express it as payback in months.

Step one is the whole calculation, and it costs one question asked consistently.

Counting the right thing is covered in counting enquiries instead of visits.

Frequently asked questions

West Coast Media Solutions Inc. provides web design, web development, hosting, digital marketing, and business consulting to organisations across Canada, drawing on more than twenty-five years in the field.