ROI Calculator

Calculate return on investment (ROI), profitability, investment performance, and project returns.

ROI Calculator

Calculate return on investment as a percentage of the amount invested. ROI expresses how much profit an investment generated relative to what it cost, making very different spending decisions comparable on one scale.

ROI formula

  • ROI: ROI = (gain - cost of investment) / cost of investment x 100

Equivalently, ROI = net profit / cost of investment x 100. The gain is the total value the investment returned, and the cost of investment is everything spent to obtain that return. A positive ROI means the investment returned more than it cost; a negative ROI means it lost money; 0% means it exactly broke even.

For marketing spend, ROI is often confused with ROAS. ROAS is revenue / ad spend, a gross ratio that ignores product costs, while ROI subtracts all costs before dividing. A campaign can post a healthy ROAS and still have a negative ROI once the cost of the goods sold is counted.

Worked example

A seller spends 500 on an advertising campaign. The campaign generates 1,400 of attributable revenue, and the goods sold through it cost 600.

  • Total cost: 500 + 600 = 1,100
  • Net gain: 1,400 - 1,100 = 300
  • ROI: 300 / 500 = 0.60, or 60% on the ad spend

For comparison, the ROAS is 1,400 / 500 = 2.8. The 2.8 looks generous, but the actual profit earned per unit of ad spend, after product costs, is the 60% figure.

Note that ROI ignores time. A 60% return in one month and a 60% return over three years are the same number; compare investments over similar periods, or annualize before comparing.

When to use this calculator

  • Judging an ad campaign. Include product costs alongside ad spend to see whether a campaign made money rather than just revenue.
  • Buying equipment or tools. Estimate the extra profit a machine, camera, or software subscription will generate against its cost.
  • Comparing stock purchases. When deciding which product line to reorder, compare the ROI each generated last season on the cash tied up.
  • Reviewing a channel expansion. Total the setup, fees, and inventory cost of a new sales channel and weigh them against the profit it added.

Common mistakes

  • Using revenue as the gain instead of profit, which can make a money-losing investment look strongly positive.
  • Leaving costs out of the denominator, such as fees, shipping, labour, and the cost of goods, so the ROI is computed against too small a base.
  • Comparing ROIs over different time spans as if they were equivalent.
  • Attributing revenue too generously; sales that would have happened anyway inflate a campaign's apparent return.
  • Chasing the highest percentage regardless of scale. A 200% ROI on a tiny spend may earn less absolute profit than a 30% ROI on a large one.

Related calculators

The profit margin calculator and markup calculator cover per-sale profitability, which feeds the gain side of ROI. The Shopify profit calculator and Etsy fee calculator help build a complete cost figure for store investments, while the inventory turnover calculator shows how quickly the cash you invest in stock comes back.

Frequently asked questions

How is ROI calculated?
ROI is the net gain of an investment divided by its cost, expressed as a percentage: ROI = (gain - cost) / cost x 100. Spending 500 to generate 800 of profit-relevant return gives an ROI of 60%. A positive result means the investment returned more than it cost; a negative one means it lost money.
What is the difference between ROI and ROAS?
ROAS divides revenue by ad spend and ignores what the products sold actually cost, while ROI subtracts all costs before dividing. A campaign with 1,400 revenue on 500 of ad spend has a ROAS of 2.8, but if the goods sold cost 600, the ROI is only 60%. ROAS measures gross ad efficiency; ROI measures whether money was actually made.
Should I use revenue or profit as the gain in an ROI calculation?
Use profit, meaning the return after subtracting the costs the investment triggered, such as the cost of goods sold and fulfilment. Using raw revenue as the gain inflates the result and can make a loss-making investment appear strongly positive.
What is a good ROI?
Any positive ROI beats breaking even, but a sensible benchmark depends on the risk, effort, and time involved, and on what else you could do with the same money. Comparisons are only fair over similar time periods, since ROI itself ignores how long the return took to arrive.
Does ROI account for time?
No. A 60% ROI earned in one month and a 60% ROI earned over three years produce the same percentage, even though the first is a far better use of capital. When comparing investments with different durations, annualize the returns or restrict the comparison to equal periods.
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