PostalNest
Free tool

Direct mail ROI calculator

Enter what you plan to spend and what you expect back. The calculator shows your cost per response, cost per new customer, return on investment, and the response rate you need to break even.
What you spend

Printing and postage together.

List, design, anything else. Use 0 if none.

What comes back

Out of 100 cards, how many people scan, call or reply.

Profit you expect from one customer, not the sale price.

Return on this mailing

100%

You earn back the cost and keep $601.00.

Total cost
$599.00
Responses
5
New customers
1
Value of those customers
$1,200.00
Cost per response
$119.80
Cost per new customer
$599.00
Profit
$601.00

Break-even response rate: 0.5%

That is about 3 of 500 people responding to cover the cost.

These are your own estimates, not a forecast. Response rates vary a lot by list, offer and season, so measure your own.

How the math works

Every direct mail campaign comes down to five numbers. The calculator uses these formulas:

  • Total cost = cards mailed × cost per card + other costs
  • Responses = cards mailed × response rate
  • New customers = responses × share of responders who buy
  • Cost per response = total cost ÷ responses
  • Cost per new customer = total cost ÷ new customers
  • ROI = (new customers × value of one customer − total cost) ÷ total cost
  • Break-even response rate = total cost ÷ (cards mailed × close rate × value of one customer)

A worked example

These inputs are made up to show the arithmetic. You mail 500 cards at $1.10 each and pay $49 for the list, so the total cost is 500 × $1.10 + $49 = $599. If 2% respond, that is 10 responses. If 20% of those become customers, that is 2 customers. If each customer is worth $1,200 to you, the mailing brings in $2,400.

Cost per response is $599 ÷ 10 = $59.90. Cost per new customer is $599 ÷ 2 = $299.50. ROI is ($2,400 − $599) ÷ $599 = 301%. The break-even response rate is $599 ÷ (500 × 0.20 × $1,200) = 0.5%, or about 3 people out of 500.

How to use the break-even number

The break-even response rate is the most useful number on this page, because you can judge it before you mail. If you need 0.5% of people to respond, the mailing is a reasonable bet for most local services. If you need 8%, change something first: a better-matched list, a stronger offer, or a product with a higher customer value.

After the mailing, replace the estimates with what really happened. Our guide to calculating direct mail ROI walks through tracking responses, and the postcard cost calculator shows what a month of mail costs.

Common questions

How do you calculate direct mail ROI?

ROI = (value of new customers − total cost) ÷ total cost × 100. Total cost is cards mailed × cost per card, plus anything else you paid for the mailing such as the list or design.

What is a break-even response rate?

It is the share of recipients who must respond for the mailing to pay for itself. Break-even response rate = total cost ÷ (cards mailed × close rate × value of one customer).

What response rate should I enter?

Use your own past results if you have them. If you have never mailed before, try a few low numbers, such as 0.5%, 1% and 2%, and see whether the mailing still pays for itself. Response rates vary widely by list, offer and season.

Should I use revenue or profit for customer value?

Use profit: what you keep from one new customer after your own costs. For a business with repeat customers, use the profit you expect over the first year.

How do I measure the real response rate?

Count every way people can respond: QR code scans, calls to a number used only on the card, form replies, and people who mention the card. Divide by the number of cards delivered.

Track real responses, not guesses

Every PostalNest card carries its own QR code, so each scan is tied to one recipient.

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