ROI Calculator
Calculate your Return on Investment to measure the profitability of your investments
Results
About ROI Calculator
Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of several different investments.
How to Use This Calculator
- Enter your initial investment amount
- Enter the return amount you received (or expect to receive)
- Specify the investment period in years
- Add any additional costs associated with the investment
- Click “Calculate ROI” to see your results
Understanding the Results
- Net Profit: The amount you gained (or lost) after subtracting your total investment
- ROI: The percentage return on your investment
- Annualized ROI: The average annual return, accounting for the investment period
- Total Investment: Your initial investment plus any additional costs
ROI Formula
ROI = (Net Profit / Total Investment) × 100
Net Profit = Return Amount – Total Investment
Total Investment = Initial Investment + Additional Costs
ROI Calculator (Free) — Calculate Return on Investment Online | AI ToolsN
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What is ROI?
Return on investment (ROI) measures how efficiently an investment generates profit relative to its cost, helping businesses and individuals compare opportunities using a simple percentage. ROI is widely used across finance, marketing, and operations because it provides a straightforward profitability signal that’s easy to interpret and communicate.
ROI formula
The standard ROI formula is ROI=Net ProfitTotal Cost×100ROI=Total CostNet Profit×100, where net profit equals returns minus costs, expressed as a percentage. Variations exist by context, including ROI=Current Value−Initial InvestmentInitial Investment×100ROI=Initial InvestmentCurrent Value−Initial Investment×100 when assessing asset appreciation or exit proceeds.
Quick example
If an initiative costs 2,000 and returns 2,600, the net profit is 600 and the ROI is 6002000×100=30%2000600×100=30%. This shows the investment produced 30 cents of profit per dollar spent, which is useful for comparing alternatives on equal footing.
How to use this ROI Calculator
- Enter total investment cost (include one-time fees and ongoing expenses for accurate results).
- Enter total return or revenue from the investment period (include realized gains, payouts, or sale proceeds where applicable).
- The calculator computes ROI automatically as a percentage so results are easy to compare across campaigns, channels, or projects.
- Adjust inputs to model best/worst cases, experiment with cost controls, and evaluate how ROI changes with price, volume, or conversion improvements.
Why ROI matters
ROI helps quantify profitability and efficiency, enabling clear prioritization of projects with the strongest expected returns. It’s especially helpful for stack-ranking marketing campaigns, capital projects, or product enhancements where budgets and timelines compete.
When to use ROI
- Marketing and advertising performance (e.g., campaign spend vs. net profit from new customers).
- Product and R&D investments (e.g., feature development vs. incremental revenue and retention).
- Operations and tooling (e.g., software subscriptions vs. cost savings and productivity gains).
Benefits and limitations
ROI is simple, universal, and great for high-level comparisons across very different initiatives. However, it does not inherently account for the time value of money, risk, or cash-flow timing—so pair it with metrics like NPV or IRR for long-horizon decisions.
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How to interpret ROI
- Positive ROI indicates profitability, while negative ROI indicates a loss relative to the investment.
- Higher ROI is generally better, but always consider time horizon, risk, and strategic fit, not just the headline percentage.
- For fair comparisons, measure ROI over the same time period and with consistent cost/revenue inclusions.
Pro tips for better results
- Track total cost fully: include production, media, tools, fees, and labor where relevant to avoid inflated ROI.
- Attribute returns accurately: include revenue, savings, or exit proceeds, and align windows (e.g., 30/60/90 days) to buying cycles.
- Test scenarios: model sensitivity to conversion rate, AOV/ARPU, churn, or discounting to see what moves ROI most.
- Compare alternatives: use consistent assumptions across options (e.g., channels or vendors) to pick the highest net benefit.
Example use cases
- Marketing: Compare paid search vs. paid social ROI after factoring in ad spend, creative costs, and net profit from conversions.
- Software: Evaluate switching tools by comparing subscription costs to productivity gains, savings, or incremental revenue.
- Projects: Prioritize initiatives with higher ROI and shorter horizons when budgets are constrained.
Related concepts
ROI is often complemented by NPV (discounted value of future cash flows) and IRR (rate of return accounting for time), which fix ROI’s time-value blind spot. For long-term investments with uneven cash flows, these metrics offer a more robust decision framework alongside headline ROI.
FAQs
What is ROI in simple terms?
ROI is the percentage of profit made from an investment compared to its cost, showing how efficiently money is being used
How do you calculate ROI?
Use ROI=Net ProfitTotal Cost×100ROI=Total CostNet Profit×100, where net profit equals returns minus costs
What is a good ROI?
“Good” depends on risk, industry benchmarks, and time horizon; compare options consistently and consider alternatives using NPV/IRR as needed.
Does ROI consider time?
Not by default; use annualized ROI or time-based measures (NPV, IRR) for investments with longer horizons or uneven cash flows.
Can ROI be used for marketing?
Yes—calculate campaign ROI by comparing net profit attributable to the campaign against total costs like media, creative, and tools.
How is ROI different from revenue?
Revenue is total income before costs; ROI factors in costs to show profitability as a percentage.
Why might two projects with the same ROI be different?
They may differ in duration, risk, cash-flow timing, or capital requirements, so consider those factors beyond the percentage.
Start calculating now
Use the AI ToolsN ROI Calculator to quantify profitability, compare scenarios, and make confident, data-backed decisions in minutes. Enter cost and returns to get a clear, comparable ROI percentage that helps prioritize the highest-impact work.