This article discusses an easy way to calculate the ROI of design.
4 Effective Ways to Calculate the ROI of Design, Take Note!
The ROI of design analysis can help you measure whether or not your investment in design is profitable. How to calculate it? Find out here!
Did you know you can measure the return on your design investment in your business? Even if it is indirect, effective design can benefit your business. In this case, you can calculate it through the ROI of design analysis.
By analyzing design ROI, you can measure the value you receive from every dollar you invest in design. For a more detailed explanation of how to calculate design ROI, check out the following article!
What Is the ROI of Design?
Return on investment (ROI) is a measurement used to evaluate the efficiency or profitability of an investment. When applied to design, ROI helps you understand the impact a design has on business performance, including increased sales, brand awareness, customer satisfaction, and loyalty.
Return on investment percentage can be calculated by comparing a design's profit minus design costs to the cost of creating the design multiplied by 100%. Using this approach, companies can evaluate the effectiveness of a design investment and determine whether the results are worth pursuing further.
How to Calculate the ROI of Design
Calculating ROI for design is not much different than calculating ROI for business in general. To measure design ROI, here are the steps you can take:
1. Measure the Metrics and KPIs of Design
The first step in a design ROI calculation is the measurement of design metrics and KPIs. Metrics in this context refer to the parameters used to measure the success of a design, while KPIs (Key Performance Indicators) serve as quantitative tools that indicate the percentage of success for a given metric.
If you want to calculate ROI to analyze design services, you can use the following KPI metrics:
Quality: Covering creativity, originality, and consistency, this aspect evaluates the overall quality of the design produced.
Efficiency: The agency's efficiency in the production of design.
Communication: Indicates how well the agency communicates with its clients.
Technical Skills: This metric measures the agency's expertise in using the necessary tools and technologies.
Adaptability: Measures the agency's ability to adapt to change and meet unexpected challenges.
Budget: When choosing a design service, price is one of the considerations. This metric measures how much it will cost you to use a service.
Reliability: This metric measures the consistency and reliability of work performance or results.
These metrics are examples of commonly used metrics. If you want to add other metrics related to design, such as UX metrics or brand identity metrics, you can include them according to your needs.
2. Creating a Design Scorehand
Next, to simplify the calculation process, you can convert the KPI scores you've evaluated for each metric to a scale of 1-10, where a score of 1 indicates poor performance of the metric and a score of 10 reflects maximum effectiveness of a metric.
Then, based on your business needs and priorities, you can assign a weight to each metric. For example, if you want to prioritize quality metrics, you can give them a higher weight than other metrics.
Make sure that the total weight of all the metrics adds up to 1, which means that each weight will have a value of less than 1.
Then, multiply the KPI score by its corresponding weight and sum all the results. You can create a table like this to make the calculation easier:
Metric |
KPI Score |
Weight |
Total (KPI x Weight) |
Efficiency |
5 |
0,15 |
0,75 |
Communication |
5 |
0,15 |
0,75 |
Quality |
7 |
0,2 |
1,4 |
Budget |
5 |
0,1 |
0,6 |
Technical skills |
4 |
0,1 |
0,4 |
Adaptability |
5 |
0,15 |
0,75 |
Reliability |
3 |
0,15 |
0,45 |
Total |
1 |
5,1 |
3. Calculating ROI as a Percentage of Cost
Based on the previous calculations, you will then be able to calculate the ROI percentage for the design services by going through the following steps:
Step 1. Double the cost of design services to get the maximum potential value (MPV).
To obtain the maximum potential value, you can multiply the service cost by two. For example, if the service cost is IDR 350,000,
Services cost x 2 = IDR 700,000.
Step 2. Divide the MPV by the Number of Metrics
Next, divide the calculated MPV by the number of metrics used.
700,000 / 7 Metrics = 100,000
Step 3. Multiply the Result by the Total KPI Score Multiplied by the Weight
Then, multiply the result by the total KPI score that has been multiplied by the weight in the table.
100,000 X 5.1 = 510,000
Step 4. Minus the Result with the Service Cost
After multiplying, minus the result with the service cost you spent to create the design.
510,000 - 350,000 = 160,000
Step 5. Divide the Result by the Service Cost
The next step is to divide the result by the design service cost.
160,000 / 350,000 = 0.46
Step 6. Multiply by 100 to Get the ROI Percentage
Finally, multiply the division result by 100% to get the ROI percentage score.
0.46 X 100% = 46%
This ROI calculation uses the KPI approach for each of the metrics. It can be done if you don't have data on the total profit from the investment.
On the other hand, if you do have data on the total profit from a design investment, the ROI calculation will be easier because you can use the following formula directly:
ROI = (Total Profit- Investation Cost / Investation Cost) x 100%
4. Interpreting the ROI of Design
ROI calculations for design will vary from company to company and can be customized to meet the needs of your business.
Here are ranges of percentages for interpretation of ROI results:
Negative ROI: Indicates that the design costs exceed the profit. This means you are experiencing a loss on your investment.
ROI of 0-50%: This represents a breakeven point where there is no loss, but improvements are still necessary.
ROI of 50-90%: This shows that the profit gained is significantly higher than the investment cost.
ROI of 90-100%: Indicates that the profit earned is nearly double or more than the investment cost.
By measuring the ROI of design, you can determine whether the design services you've chosen are delivering the results you're expecting. You can select the most effective and profitable design partner based on this interpretation of ROI. Every design investment is about more than aesthetics, it is about helping your business grow and succeed.
How Can a Design Partnership Add Value to Your Brand?
Working with a design agency offers significant benefits to your business and ROI Design can help you choose the right creative design services for your business.
With customizable subscription packages, you pay only for the services you need, saving the costs typically spent on salaries and managing an in-house team. VISUWISU is a reliable partner that ensures consistent and professional design quality.
VISUWISU has also been proven to optimize budgets with flexible subscription packages that can save you up to 50% compared to the cost of in-house graphic design and visual assets.
Make smarter decisions and increase your company's design ROI. Contact VISUWISU now!