Business owners that are looking to increase their business through the purchase of an LED based Electronic Message Center should calculate their potential Return on Investment (ROI) to understand the impact this purchase can have on top line sales and bottom line profits.
Consider the following examples as typical ROI calculations.
Scenario A
A small business is presently doing $3000/day in revenue. If this business is open 6 days per week. Weekly revenue will be $18,000 per week and $936,000 per year. The Small Business Association states ” a business that utilizes an Electronic Message Center (EMC) will typically see and increase in sales of 15 to 150%” The range of success will be impacted by visibility of the sign, traffic count driving by the sign, and the quality of message content. Using the most conservative estimate of 15% increase in business will yield an annual revenue increase $140,400. Assuming a gross profit margin of 35% an annual profit increase of $49, 140 can be expected. LED Electronic Message Centers are extremely energy efficient and a typical 3 foot by 6 foot display with a 25 mm dot pitch double sided monochrome display typically would cost .17 cents per day to operate. This translates into $62.05 per year of operating cost. These EMC’s are virtually maintenance free and provide over 10 years of life as the LED’s are rated for over 100,000 hours so we will assume zero maintenance costs. This yields a net yearly incremental profit of $49,078. The sign described above typically can be purchased for $12000 dollars, assuming $8000 for installation yields a net cost of $20000. ROI payback can be calculted as $20,000/$49078 = .4078/year or 4.89 months.
Scenario B
A business makes 30 sales per day at $80 per sale. Assume a gross profit of 40% yielding a gross profit of $96 per day . If you assume a traffic count of 10,000 vehicle per day, which is only a slightly busy street you will get 10,000 exposures. Conservatively let’s assume the business makes a new sale every 3000 exposures. This will yield 3.33 new sales per day resulting in 3.33 x 80 x .40 = $106.56 dollars per day incremental gross profit. Using the .17/day operating cost in scenario A the business will generate $106.37 x 312 days/year = $33,187.44. Using a total cost of $20,000 once again the ROI payback is .602 years or 7.23 months.
These ROI’s are very attractive and are based on conservative ranges. Obviously even shorter ROI’s can be obtained with more aggressive sales growth numbers. A free ROI calculator for LED based Electronic Message Centers can be found at http://www.empvisualsolutions.com/Choosing-a-Sign/Return-on-Investment
