The INPROFIT ratio is the most important ratio that you need to know to determine the health of your entire Internet operation. It incorporates factors related to your internet versus total revenues, a valuation for traffic, total customer acquisition costs, support costs, earnings per visitor (EPV) in a complex but extremely helpful equation.

The INPROFIT ratio is being successfully used by CTO, CIO, CFO and CEO to better manage internet profits within the enterprise.

Since more traffic is not always better, we integrated the EPV (earnings per
visitor) into the traffic equation. This way if a site receives a
million visitors but only earns $0.02 for each of them then they are
equal to a firm who makes $2.00 per visitor but yet only receives
10,000 visitors.

Thus it links the quality of your traffic and your operating costs. If you’re spending more in marketing, advertising, SEO, etc. to receive that traffic then you’re actually earning in revenues then this will reduce your revenue valuation. similarly there are many others variables that go into a the INPROFIT ratio, but it creates an apples to apples comparison and a unique benchmark that can be used as a starting point for comparative purposes, even as your business changes and expands.

Pierre Basson, 
 

Source: http://www.rankatlanta.com

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