Yesterday Insider wrote about a 10 by 24 billboard digital billboard which generates a 34% IRR  because it has a cheap lease and the owner does not pay sales commissions.  In a normal scenario assuming 20% sales commissions and a 20% lease cost that digital billboard still generates a 17% IRR.

The digital billboard which Insider wrote about is generates monthly revenue of $742/flip with 7 of 9 flips sold.  A breakeven analysis shows that the sign needs to achieve minimum revenue of $4,200/month or $600/flip assuming that 7 of 9 flips stay sold in order to achieve a return on capital in excess of 10% when you assume sales commissions of 20% of revenue, lease costs of 20% of gross and when you incorporate replacement costs into the analysis.

Insider’s take:  It doesn’t make financial sense to put up a 10 by 24 or 10.5 by 36 digital sign unless you can generate at least $600/flip in revenue.  These numbers are conservative because they assume that the entire sign must be replaced at the end of 11.4 years.  You won’t need to replace all your digital sign components at the end of 11.4 years as subsequent posts will discuss.

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