How To Calculate The Profitability Of Your Black Friday Promotion + Why It Matters
Heads up: We use affiliate links for our favorite products, softwares and companies. If you click and purchase, we may receive a small commission at no extra cost to you.
It’s that time of year when business owners typically see a spike in sales — yay! And while we’re in full support of making as much money as possible, we also like to look at the flip side and analyze everything.
When you decide to do a promotion for Black Friday, you’re probably doing it to get a spike in sales and capitalize on everyone’s excitement around the holiday season, right?
So in order to get the MOST out of your promo, you’ll have to take a look at something besides the sales: Profit!
Profit is our favorite topic, because it shows you exactly what’s working and what’s not. Once you figure out what’s not working, you know where to focus your attention and improve. Plus, you can keep doing what IS working and create a rinse-and-repeat situation.
In this blog, we’re exploring how to decide if a Black Friday offer is worth your time and energy by calculating the profits of the offer. Trust us, once you know how to figure out your profitability, you’ll want to calculate it for EVERYTHING you do!
The Benefits of Running a Black Friday Sale or Promo
There’s one obvious answer here, which would be to see a quick spike in sales! We all love seeing those Stripe notifications in our inbox, right?
But the other benefits include things like:
Attracting new clients/customers to your brand
Converting fence-sitters or previous lurkers
Building trust with your existing audience
Generating new leads with a low-ticket offer
But more than likely, you’d have to make a plan in order for this to work out in your favor. So you might have to have your team members dedicate some time to creating a new offer (or adjusting a current one). You might have to hire a copywriter for a special sales sequence. You might have your social media team create more content than they normally do to promote the deal.
Which means that everything your team or your contractors do outside of regularly scheduled work directly affects the profitability of your Black Friday promo. Now, let’s talk about how to calculate it for yourself so you can feel confident offering a rock-solid deal.
Calculating Your Black Friday Offer Profitability
If you decide to run a special, you need a strategy behind it. Don’t just do it for the vanity metrics and high sales numbers!
Once you figure out what you’ll be selling, have your team start tracking any time they spend creating the offer and/or any assets you need to promote it. As the owner, you don’t need to track your own time, so only worry about having accurate time tracking data from your team members. If you have contractors who charge you a flat rate for something, we’ll need those rates and fees as well.
Not sure what time tracking is? Clockify is a Chrome Extension that makes clocking in and out of tasks SO easy! We use this daily and have put sooooo many of our clients on it too. Plus it’s free, what’s not to love?
Let’s say you decide to sell a $97 course on Black Friday, and you want to make $100,000 from it. You’ll need to sell 1,030 courses to reach that goal before expenses. Using your time tracking data, and any direct expenses you have related to the offer, you’ll calculate the profits.
Direct expenses would include:
The copywriter you hired to write an email sales sequence
The SMM you hired to create 3x more content than normal
Your assistant who spent 10 total hours working on assets for the promo
The Facebook/Instagram ad spend to drive traffic to the sales page
Any affiliate payouts you made
Stripe or PayPal fees
But you wouldn’t include things you already had in place or anything you use all year long in your business like your website, course platform, or any other tech you use daily.
If you need help calculating how much you paid your team members to work specifically on this offer: Multiply the number of hours they worked by how much you pay them per hour to get how much you paid them directly on Black Friday-related work.
Once you have an itemized list of your direct expenses, simply subtract it from your gross sales!
Profit = Sales - Expenses
And there you have it! Now you can calculate the profitability of anything you sell with ease.
Should You Run a Black Friday Promotion?
YES! Because you have a strategy in place to make sure your offer is actually going to make you money.
Just make sure that when you’re creating the pricing structure for your offer, it’s not secretly putting you in the hole. There’s tons of ways to offer a Black Friday promo without discounting your services or products, so don’t feel like that’s the only way to create buzz around your business or get new people in the door.
If you’d rather not discount your offer, can you add value in a different way? Maybe it’s a bonus course, product or template that they get for free when they purchase. Or maybe they get early access to something that’s brand new! Maybe you pledge to donate a portion of your sales to a charity this season instead. Think about what would be MOST valuable to your ideal audience and get inspired by that.
After the promo is over and you’ve run your numbers, take a look at the results and figure out if the promotion was worth it or not. If you were profitable, were the numbers high enough to justify all the extra work you and your team put in? If you weren’t profitable, how can you make adjustments for next year to turn it around?
We know that calculating profitability and sifting through time tracking data isn’t everyone’s cup of tea, but it’s totally ours. We even offer profitability calculation for our clients’ offers, services, products, and even their events! It’s typically an add on to monthly bookkeeping services, but it’s SO WORTH IT to know exactly how much everything you sell brings in each day/week/month/year — you get the idea!
Ready to step confidently into money clarity for your business? We can’t wait to meet you!
Related Posts
