ROI Calculator
Calculate the percentage return on an investment as (Final Value − Initial Investment) / Initial Investment × 100. The most widely used single-number measure for comparing investments, projects, or campaigns of different sizes on a common percentage basis.
Last updated: May 2026
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About this calculator
Return on investment (ROI) is the ratio of net gain (or loss) to the original cost, expressed as a percentage. The formula is ROI = (FV − I) / I × 100, where I is the initial investment (capital outlay) and FV is the final value (what you received back, including the original capital). A positive ROI means you made money; zero means you broke even; negative means you lost. Variables: initialInvestment > 0 (must be non-zero — ROI is undefined for a free input); finalValue can be any real number (zero if the investment was lost completely, negative in pathological cases like liabilities exceeding assets). Edge cases: I = 0 produces division by zero and an undefined ROI; FV < 0 produces ROI below -100% (rare but possible if the investment generates liabilities). The simple ROI formula is time-agnostic — a 20% ROI over 1 month is wildly better than the same 20% over 10 years, but the raw number does not reflect that. For time-adjusted comparisons, use annualised ROI = ((FV/I)^(1/t) − 1) × 100, where t is years; this is the constant rate that would have produced the same FV under compounding. ROI also ignores risk, opportunity cost, and the time value of money — a high-ROI investment can still be inferior to a lower-ROI one with lower risk or shorter horizon. For rigorous capital-budgeting decisions use net present value (NPV) or internal rate of return (IRR) instead, both of which discount future cash flows by an appropriate cost of capital. Despite these limitations, ROI remains the lingua franca of investment communication because it is dimensionless, easy to compute, and intuitive.
How to use
Example 1 — Stock trade. You buy $10,000 of stock and sell it later for $12,000 (including any dividends). Enter Initial Investment = 10000, Final Value = 12000. ROI = (12000 − 10000) / 10000 × 100 = 20%. ✓ A 20% return — but the ROI alone does not tell you whether this took 6 months (excellent — annualised ~44%) or 5 years (mediocre — annualised ~3.7%). Always pair simple ROI with the holding period. Example 2 — Marketing campaign. You spend $15,000 on a paid-ads campaign and it produces $22,500 in attributable revenue. Enter Initial Investment = 15000, Final Value = 22500. ROI = (22500 − 15000) / 15000 × 100 = 50%. ✓ This is "campaign ROI" in marketing usage — sometimes called ROAS (return on ad spend) — and 50% is generally considered solid for direct-response ads. Note that "final value" here is revenue, not profit; for true ROI you should subtract the cost of goods sold and other variable costs from the revenue before computing.
Frequently asked questions
What does a "good" ROI look like?
Context dominates. For stock-market index investing, the long-run average is about 10% per year nominal (≈7% real after inflation), so "good" annual ROI is at least matching that. For real-estate income properties, 8–12% cash-on-cash return is common. For early-stage venture capital, target ROIs are extreme (10–100×) to compensate for the high failure rate of individual investments. For marketing campaigns, ROIs of 50–200% are common but the relevant question is incremental ROI (would this revenue have happened without the campaign?). Always benchmark against the appropriate asset class or activity, and consider risk, liquidity, taxes, and the alternative use of capital before declaring an ROI "good".
What is the difference between ROI and IRR (internal rate of return)?
ROI is the simple total-percent-gain over the life of the investment, without adjusting for the time value of money. IRR is the annualised compound rate of return that would have made the present value of all cash flows (positive and negative, at the actual times they occurred) equal to zero. For a single up-front investment and a single payoff at time T, IRR ≈ ((FV/I)^(1/T) − 1). When cash flows are irregular (some years of contribution, some of withdrawal, terminal sale value), IRR requires solving a polynomial equation and is best computed in a spreadsheet (Excel's IRR function) or financial software. IRR is the right metric for serious capital-budgeting decisions; ROI is the right metric for high-level marketing or quick comparisons across short, similar-horizon investments.
How do I adjust ROI for time?
Use annualised ROI: ((FV/I)^(1/t) − 1) × 100, where t is the holding period in years. This is the constant compound rate that would have produced the same final value. For example, ROI = 20% over 2 years annualises to (1.2)^(1/2) − 1 = 9.54% per year; ROI = 20% over 6 months annualises to (1.2)^(1/0.5) − 1 = 44%. Annualised ROI lets you fairly compare investments of different durations. For very short horizons (days, weeks), annualisation can produce eye-popping numbers (a 1% gain in a week is ~67% annualised) that are mathematically valid but practically meaningless — daily returns are too noisy to extrapolate. For long horizons (decades), annualised ROI is essentially the compound annual growth rate (CAGR) and is the standard way to report long-run investment performance.
What are the most common mistakes people make with ROI?
The first is ignoring the time dimension — a 20% ROI sounds impressive until you learn it took 10 years (annualised ~1.8%, worse than a savings account). The second is treating revenue as "final value" in marketing campaigns; the right denominator is profit (revenue minus all costs of goods sold and operations), not revenue. The third is forgetting taxes — capital-gains tax can shrink an apparent 20% ROI to 14% after-tax in a high-bracket case. The fourth is comparing ROIs across vastly different risk levels (a guaranteed 5% Treasury yield and an 8% speculative stock pick are not comparable on ROI alone). The fifth is including financing costs (interest paid on a margin loan, mortgage interest) in the calculation inconsistently; if you borrowed to invest, the financing cost belongs in the calculation but is easy to forget. The sixth is double-counting attributable revenue across overlapping marketing channels, which can inflate ROAS dramatically.
When should I not use this calculator?
Skip it for investments with multiple cash flows (some years of contribution, some of distribution) — use IRR or NPV instead. Do not use simple ROI to compare investments of very different horizons; always annualise first or use IRR. It is the wrong tool for risk-adjusted return analysis (Sharpe ratio, Sortino ratio, alpha, etc.); ROI alone gives no information about volatility or downside risk. Avoid it for marketing-mix modelling or attribution across multiple channels; you need a multi-touch attribution model to properly assign credit. Do not use it when the time period is so short that the result is statistically meaningless (a one-day "ROI" on a stock trade is just market noise). Finally, for capital-budgeting decisions involving cost of capital, opportunity cost, and risk-adjusted hurdle rates, use a full DCF (discounted cash flow) model rather than relying on simple ROI alone.