I'm a marketer trying to figure out the amount of orders or revenue required to get an ROI of 25% from digital advertising.
To calculate a more accurate ROI, I'm incorporating COGS with the formula: ROI = (GR - (AS + O * COGS))/(AS + O * COGS)
GR = Gross Revenue
AS = Advertising Budget
O = Orders
COGS = Cost of Goods Sold
The Known Values Are:
COGS: $28
Advertising Spend: $25000.
However, I still have 2 unknowns (Gross Revenue and Orders). Is it possible to still figure out either Orders or Gross Revenue?
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You should have an equation linking orders to gross revenue. If you always sell at the same price gross revenue is just the product of the price and the number of orders. If not, you need to figure some sort of average selling price and multiply the number of orders by that to get gross revenue. Then you will have only one variable and can solve for it.
Added you have $$0.25=\frac {45\cdot O - AS - 28 \cdot O}{AS + 28 \cdot O}\\AS+28\cdot O=4(17\cdot O-AS)\\5\cdot AS=40\cdot O\\O=\frac {25000}8=3125$$