Return on Investment Calculator
Measure how much profit you earned relative to the cost of an investment, expressed as a percentage. Use it to compare marketing campaigns, capital purchases, or any business expenditure.
About this calculator
Return on Investment (ROI) is a universal metric for evaluating the efficiency or profitability of an investment relative to its cost. The formula is: ROI (%) = (Gain from Investment / Cost of Investment) × 100. 'Gain from Investment' represents the net profit generated — that is, the total return minus the original cost of the investment. 'Cost of Investment' is the total amount of capital deployed. A positive ROI means the investment was profitable; a negative ROI signals a loss. ROI is intentionally simple and versatile, making it applicable across contexts ranging from stock purchases and real estate to advertising spend and employee training. Its main limitation is that it does not account for the time value of money or the duration of the investment — a 50% ROI over 10 years is far less impressive than 50% over 6 months. For time-sensitive comparisons, consider annualizing the ROI.
How to use
A marketing team spends $10,000 on a paid advertising campaign. The campaign generates $35,000 in new sales revenue. The gain from the investment (net profit attributable to the campaign) is $35,000 − $10,000 = $25,000. Step 1 — Divide gain by cost: $25,000 / $10,000 = 2.5. Step 2 — Multiply by 100: 2.5 × 100 = 250%. The ROI is 250%, meaning for every dollar spent, the campaign returned $2.50 in profit — a strong result.
Frequently asked questions
What is a good ROI percentage for a business investment?
A 'good' ROI depends on the type of investment and the risk involved. For stock market investments, an annualized ROI of 7–10% is generally considered solid. For marketing campaigns, many businesses target at least 100–200% ROI as a threshold for continued spending. Higher-risk investments, such as startups or new product launches, typically require higher expected ROI to justify the uncertainty. Always compare ROI against the cost of capital and alternative uses of those funds.
What is the difference between ROI and net profit margin?
ROI measures the efficiency of a specific investment relative to its cost, making it ideal for comparing discrete projects or expenditures. Net profit margin, on the other hand, is a company-wide metric that measures overall profitability as a percentage of total revenue. ROI answers 'Was this particular decision worth it?' while net profit margin answers 'Is the overall business profitable?' Both are valuable but answer different strategic questions.
How do you calculate ROI when an investment generates returns over multiple years?
When an investment yields returns over multiple years, a simple ROI calculation sums all net gains over the life of the investment before dividing by the initial cost. However, this ignores the time value of money — a dollar received in five years is worth less than a dollar today. For multi-year investments, analysts prefer metrics like Net Present Value (NPV) or Internal Rate of Return (IRR), which discount future cash flows. You can also annualize ROI by dividing it by the number of years to enable fair comparisons across investments of different durations.