ROI Calculator
Calculate simple return on investment (ROI) as the percentage gain or loss from a marketing campaign, inventory bet, or business investment relative to its cost. Use it for the foundational "did this make money?" check on any discrete ecommerce investment — marketing campaigns, inventory purchases, equipment, software, hires.
Last updated: May 2026
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About this calculator
The formula is: ROI = ((returns − investment) ÷ investment) × 100. The numerator is net gain (revenue minus the original investment); dividing by the original investment expresses it as a percentage. A $5,000 marketing campaign that generates $7,500 in attributable revenue produces an ROI of ((7500 − 5000) / 5000) × 100 = 50%. The metric is universal across business contexts because it normalizes returns to a comparable scale regardless of investment size. For ecommerce specifically: marketing campaign ROI compares revenue against ad spend; inventory ROI compares gross profit against cost of goods purchased; software ROI compares time-saved value against subscription cost. Edge cases: zero investment produces division by zero; investment-larger-than-returns produces negative ROI (loss). Simple ROI has a critical limitation: it ignores time. A 30% ROI earned in 3 months is wildly different from a 30% ROI earned over 3 years — the first annualizes to ~167% APR, the second to ~9% APR. Always pair ROI with the holding period or use annualized ROI / CAGR for fair comparisons. The "returns" definition also matters — gross revenue, gross profit, or net profit all produce very different ROI numbers. For ecommerce, gross-profit ROI is usually most useful: a $5,000 marketing spend producing $7,500 revenue at 40% gross margin generates only $3,000 of gross profit, so true ROI = ((3000 − 5000) / 5000) × 100 = −40% (a loss). Always compute ROI using the same units (revenue-only vs gross-profit vs net-profit) when comparing alternatives, and document which framework you used.
How to use
Example 1 — Paid ads campaign. You spent $4,500 on a Google Ads campaign and it generated $11,250 of attributed gross revenue. Enter 4500 for Investment and 11250 for Returns. Result: 150%. Verify: ((11250 − 4500) / 4500) × 100 = 6750 / 4500 × 100 = 150%. ✓ A 150% ROI on revenue basis sounds excellent — until you account for gross margin. At 35% gross margin, gross profit is 11250 × 0.35 = $3,937, which is less than the $4,500 invested, producing a gross-profit ROI of −12.5% (the campaign actually lost money on a true profitability basis). Always check ROI in profit terms, not just revenue. Example 2 — Bulk inventory purchase. You bought $20,000 of inventory and sold the entire batch for $35,000 over 4 months. Enter 20000 and 35000. Result: 75%. Verify: ((35000 − 20000) / 20000) × 100 = 75%. ✓ A 75% return over 4 months sounds great; annualized, that's roughly 275% APR — well above any benchmark return. But this ignores carrying costs (storage, capital opportunity cost), customer acquisition expenses if marketing was needed, and any returns/refunds. Real net ROI after operational costs is typically 30-60% of headline gross ROI for ecommerce.
Frequently asked questions
What's the difference between revenue ROI, gross profit ROI, and net profit ROI?
Revenue ROI uses gross revenue as the "returns" value; gross profit ROI uses revenue × gross margin; net profit ROI uses revenue − all costs (including the investment itself and all operating expenses). Each measures different things. Revenue ROI is the easiest to compute but overstates true return — a 100% revenue ROI on a 30% gross margin product really means -10% gross-profit ROI (you spent $1 and made $0.30 of gross profit, losing $0.70). Gross profit ROI is the right metric for evaluating discrete investments (ad campaigns, inventory bets) on a per-customer or per-order basis. Net profit ROI is the most honest for total business performance but requires allocating overhead that may not directly attribute to the investment. For ecommerce campaign evaluation, gross profit ROI (or "true ROAS" in ad-platform language) is the gold standard.
How does ROI differ from annualized ROI?
Simple ROI is the total percentage gain divided by cost, regardless of time. Annualized ROI (CAGR) converts that total into an equivalent yearly rate using compound math: annualized ROI = ((final / initial)^(1/years) − 1) × 100. So 50% total ROI over 2 years annualizes to ~22.5%, while the same 50% over 5 years is only ~8.4% annualized. Annualized rates are essential for comparing investments of different durations — a 6-month inventory bet at 30% ROI is much better than a 5-year equipment investment at 50% ROI on an annualized basis. For short marketing campaigns (under 1 year), simple ROI is fine; for any multi-year comparison, annualize first to avoid misleading conclusions.
What is a good ROI for marketing spend?
Industry- and channel-dependent, but as a general framework: paid social and search campaigns typically target 3-5× ROAS (return on ad spend), which translates to 200-400% revenue ROI; profitable after gross margin requires the calculated gross-profit ROI to be positive. For ecommerce specifically, the rough framework is: campaign needs to break even on a gross-profit basis as a minimum (≥100% gross-profit ROI), and should clear at least 50-100% gross-profit ROI to contribute meaningfully to fixed-cost coverage and growth investment. Top-quartile DTC campaigns achieve 200-400% gross-profit ROI, especially on retention/repeat-purchase campaigns where customer LTV exceeds first-purchase value. For email marketing (very low cost), 1000%+ ROI is typical. For brand awareness campaigns (no direct conversion), ROI calculation requires attribution modeling beyond simple click attribution.
What are the most common mistakes people make with ROI?
The biggest is using revenue as "returns" instead of gross profit, dramatically overstating real returns for low-margin businesses. The second is forgetting time — a 50% ROI over 5 years (8.4% annualized) might lose to a savings account. The third is omitting hidden costs: marketing campaigns require creative production, agency fees, internal time; inventory bets carry storage, insurance, opportunity costs. The fourth is using inconsistent definitions when comparing alternatives — Campaign A measured by gross revenue vs. Campaign B measured by gross profit produces apples-to-oranges results. The fifth is celebrating ROI without checking whether the investment actually caused the returns; many "high ROI" campaigns are just capturing demand that would have converted anyway through other channels. For accurate ROI, use last-touch attribution as a baseline and consider incrementality testing (running the same investment in some markets but not others) to measure true causal lift.
When should I not use this calculator?
Skip it for investments with multiple cash flows over time (rental property with rent, business with quarterly distributions, dollar-cost-averaged ad spend); for those, use IRR or money-weighted return. It is the wrong tool when you need risk-adjusted comparison — ROI ignores volatility entirely, so a 50% ROI from a single risky bet and a 50% ROI from diversified investments look identical despite very different risk profiles. Do not use it for very short holding periods (a few days or weeks) where annualizing inflates the figure beyond any meaningful sustainability. It also doesn't handle brand-building campaigns where revenue lag is months; for those, use marketing-mix modeling (MMM) or brand-lift studies. For SaaS unit economics, LTV:CAC ratio is more useful than ROI on a per-customer basis. And when comparing across investment categories (marketing vs. inventory vs. equipment), use NPV or IRR with consistent discount rates to handle different cash-flow patterns and durations honestly.