Example for service professionals. If you provide a service where you give away first session as complimentary, give a presentation for a sale, or prepare a proposal, these costs also need to be included in your ROI calculations. If you provide this service in person you need to also add in your travel time and an average cost for car expenses (not just gas). This is why it is so important to prequalify. For coaches, this is why I recommend only performing complimentary session over phone or in your office unless you're fee is built in and high enough.

4. Pay per sale, also called a referral fee for closed transaction . This is typically a percentage of sales generated by advertisement. A commission is paid when a sales is made by advertiser and not by number of click-throughs. Advantageous to advertiser not to publisher.

Example: Someone places an ad in your eNewsletter with an agreement to pay a higher percentage fee for each sale but zero for any nonsales. The responsibility of success for sale falls mainly on advertiser. If you enter into this type of agreement, make sure advertiser delivers on their promises, and has a structurally sound sales processing system in place. Not to mention a means for reporting to you what was sold, when and where too.

5. Customer lifetime value. Stated in dollars, this is average length your customer remains with you divided by net profit of that value. If you are new in business or don't have actual figures you will need to estimate.

Example: If you are a coach and average of 22 steady clients per month for an average agreement of six months. Your net profit for six months would be $46,200. You then divide $46,200/22 = $2,100. What this means is that every client that you acquire for six months is worth $2,100 to your business.

6. Cost per click, also known as cost per click-through (CPC). How much you have to pay for every time someone clicks on your ad -- clicks from that point to next point, usually your web site.

Example: You purchase a banner space on someone else’s web site for your product or service. That space costs you $400 for month. There were 225 click-throughs from that banner to your site during that month. $400 divided by 225 = $1.77. You paid $1.77 for each click-through.

7. Cost per lead, also known as pay per lead. This usually occurs when you purchase prospect lists. These are specific lists from people who have already given permission to someone else that they are interested in this type of product or service. In other words, they have opt-in to a similar request, and they are target market you are looking for. The leads can be limited to just providing e-mail address or in great details.

The old pick and shovel guy that is me! :)

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