Product Launch ROI Calculator
Calculate the expected ROI of a new product launch. Factor in development cost, marketing spend, expected revenue, and time horizon to evaluate whether a product investment makes sense.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Product Launch ROI Calculator | Launch ROI = (Revenue - Total Investment) / Total Investment * 100 | % |
Step-by-Step Examples
$150k dev, $50k marketing, $300k Y1 revenue, $500k Y2, 60% margin.
- Total investment: $200k
- Y1 gross profit: $180k | Y1 ROI: -10% (not recovered yet)
- Y2 cumulative GP: $180k+$300k = $480k
- Y2 cumulative ROI: ($480k-$200k)/$200k = 140%
$80k development, $40k launch marketing, $400k Y1, $600k Y2, 40% margin.
- Investment: $120k
- Y1 GP: $160k | Y1 ROI: 33%
- Y2 cumulative GP: $160k+$240k = $400k
- Y2 ROI: 233%
$200k dev, $100k marketing, $150k Y1 revenue, $200k Y2, 50% margin.
- Investment: $300k
- Y1 GP: $75k | Y1 ROI: -75%
- Y2 cumulative GP: $75k+$100k = $175k
- Y2 ROI: -41.7% - still not recovered in 2 years
Real-World Applications
Common Mistakes to Avoid
Launch ROI should be measured on gross profit (revenue minus COGS), not revenue. A 60% margin product is very different from a 20% margin product on the same revenue.
Development and launch costs are one-time. Customer support, maintenance, updates, and continued marketing are ongoing costs that affect true long-term ROI.
Model best-case, base-case, and downside scenarios. A launch with positive ROI only in the best case deserves much more scrutiny than one that works in the base case.