How do you calculate ROI?

ROI (Return on Investment) is typically calculated as: ROI = (Gain from investment − Cost of investment) ÷ Cost of investment. The result is often expressed as a percentage by multiplying by 100. For example, if you invest $10,000 and later receive $12,000 back, your ROI is (12,000 − 10,000) ÷ 10,000 = 0.20 or 20%.

A good ROI depends on the risk, time horizon, and alternatives available. For low‑risk investments, 3–7% per year might be reasonable. For business projects or marketing campaigns, many companies target 20–100% or more. The key is to compare ROI with your cost of capital and with other opportunities of similar risk.

What is annualized ROI?

Annualized ROI converts a total return over multiple years into an equivalent yearly rate. A common formula is: Annualized ROI = (Final value ÷ Initial value)^(1 ÷ years) − 1. This allows you to compare investments of different durations on the same annual basis.

What is the difference between ROI and ROE or ROA?

ROI measures the return relative to the total capital invested in a specific project or asset. ROE (Return on Equity) measures profit relative to shareholders' equity, and ROA (Return on Assets) measures profit relative to total assets. ROI is usually project‑specific, while ROE and ROA are company‑level profitability ratios.

How do you calculate marketing ROI?

Marketing ROI typically uses incremental profit, not just revenue. A simple formula is: Marketing ROI = (Incremental profit from campaign − Marketing cost) ÷ Marketing cost. Incremental profit is the additional profit generated by the campaign compared with a baseline without the campaign.

ROI Calculator – Return on Investment

Calculate ROI for investments, projects, and marketing campaigns. Compare scenarios, see net and annualized ROI, and understand the formulas behind the numbers.

Initial investment (cost)

currency

Final value

currency

Holding period

Used to compute annualized ROI.

Fees / additional costs (optional)

currency

Brokerage, taxes, transaction fees, etc.

ROI summary

Net profit: –

Gross ROI: –

Net ROI (after fees): –

Time‑adjusted ROI

Annualized ROI (gross): –

Annualized ROI (net): –

Assumes compounding and constant rate over the holding period.

Revenue generated

currency

Total cost (investment)

currency

Cost of goods sold (COGS)

currency

Used to compute profit‑based ROI.

Campaign duration

ROI basis

Revenue‑based ROI: (Revenue − Cost) ÷ Cost
Profit‑based ROI: (Revenue − COGS − Cost) ÷ Cost

Campaign ROI

Incremental profit: –

ROI (%): –

ROAS (Revenue ÷ Cost): –

Time‑adjusted metrics

Annualized ROI: –

Payback multiple: –

Annualization assumes constant rate over the campaign duration.

Quickly compare up to three investment or campaign scenarios side by side. Enter cost and final value (or revenue) for each.

	Scenario A	Scenario B	Scenario C
Cost
Final value / revenue
Holding period (years)

Scenario A

ROI: –

Annualized ROI: –

Scenario B

ROI: –

Annualized ROI: –

Scenario C

ROI: –

Annualized ROI: –

What is ROI (Return on Investment)?

ROI (Return on Investment) measures how much you earn (or lose) relative to the money you invested. It is one of the most widely used profitability metrics in finance, business planning, and marketing.

Basic ROI formula

\[ ROI = \frac{\text{Gain from investment} - \text{Cost of investment}}{\text{Cost of investment}} \]

To express ROI as a percentage, multiply the result by 100.

Gross vs net ROI

Gross ROI: ignores fees, taxes and extra costs.
Net ROI: subtracts all additional costs (fees, commissions, taxes, etc.).

Net ROI formula

\[ ROI_{\text{net}} = \frac{\text{Final value} - \text{Initial investment} - \text{Fees}}{\text{Initial investment}} \]

Annualized ROI (time‑adjusted return)

A 50% ROI over 10 years is very different from 50% in one year. To compare investments with different durations, convert total ROI into an annualized rate.

Annualized ROI formula

\[ ROI_{\text{annualized}} = \left(\frac{\text{Final value}}{\text{Initial investment}}\right)^{\frac{1}{T}} - 1 \]

where $T$ is the holding period in years.

Example

You invest 10,000 and receive 15,000 after 3 years.

Total ROI: $(15{,}000 - 10{,}000) / 10{,}000 = 0.5 = 50\%$
Annualized ROI: $(15{,}000 / 10{,}000)^{1/3} - 1 \approx 14.47\%$ per year

Marketing ROI vs ROAS

In marketing and advertising, ROI is often confused with ROAS (Return on Ad Spend). This calculator lets you see both:

ROAS = Revenue ÷ Marketing cost
Marketing ROI = (Incremental profit − Marketing cost) ÷ Marketing cost

Marketing ROI (profit‑based)

\[ ROI_{\text{mkt}} = \frac{\text{Revenue} - \text{COGS} - \text{Marketing cost}}{\text{Marketing cost}} \]

Interpreting ROI results

ROI > 0: the investment generated a profit.
ROI = 0: break‑even (no gain, no loss).
ROI < 0: the investment lost money.

A “good” ROI depends on risk, time horizon, and your alternative opportunities (cost of capital). For risky projects, you should demand a higher ROI than for safe ones.

Limitations of ROI

Ignores the timing of cash flows (unlike NPV or IRR).
Can be manipulated by changing the definition of “cost” or “gain”.
Does not directly account for risk or volatility.
Not suitable alone for long‑term, multi‑stage projects.

Use ROI as a quick screening metric, then complement it with more advanced tools like NPV, IRR, or payback period analysis when making major decisions.

FAQ

How do I use this ROI calculator?

Start with the Simple ROI tab for basic investments: enter initial investment, final value, optional fees and holding period. For marketing or business cases, switch to Advanced / Marketing ROI to include revenue, COGS and campaign duration. Use Compare Scenarios to rank multiple options side by side.

What is a good ROI for marketing?

Benchmarks vary by industry, channel and risk. Many marketers target at least 3–5× ROAS and a positive profit‑based ROI after all costs. However, early‑stage growth campaigns may accept lower short‑term ROI in exchange for long‑term customer value.

Is ROI the same as ROE or ROA?

No. ROI is usually project‑specific. ROE (Return on Equity) and ROA (Return on Assets) are accounting ratios calculated from a company’s financial statements and used to compare overall profitability between firms.