Return on Investment (ROI) Calculator
Calculate ROI percentage, payback period, and net return for any investment or business decision.
📊 Business📐 ROI = (Net Return / Investment Cost) × 100
Initial investment ($)
Total return / revenue generated ($)
Investment duration (months)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Return on Investment (ROI) Calculator | ROI = (Net Return / Investment Cost) × 100 | % |
Step-by-Step Examples
Example 1
Marketing Campaign
$50K investment, $75K return, 6 months.
- Net return: $25,000 | ROI: 50%
- Payback: 12 months | Annualized: 100%
✓ 50% ROI / 100% annualized
Example 2
Equipment Purchase
$100K equipment, $140K revenue, 24 months.
- Net: $40,000 | ROI: 40% | Annualized: 20%
✓ 40% ROI
Example 3
Poor Investment
$80K investment, $60K return.
- Net: -$20,000 | ROI: -25% | Negative!
✓ −25% ROI
Real-World Applications
Business Owners
Evaluate any investment before committing.
CFOs
Compare competing capital allocation opportunities.
Marketing Teams
Prove campaign ROI to stakeholders.
Investors
Screen investments by return potential.
Common Mistakes to Avoid
⚠️
Using gross return instead of net
ROI must use net return (return minus investment). Using gross return dramatically overstates ROI.
⚠️
Not annualizing for fair comparison
A 50% ROI over 5 years = 10% annualized. A 30% ROI over 1 year = 30% annualized. Always annualize when comparing investments of different durations.
Frequently Asked Questions
What is a good ROI? ▾
Stock market average: ~10%/year. Real estate: 8-12%/year. Business investments: 15-30%+ expected. Rule of thumb: any ROI exceeding your cost of capital (typically 8-15%) creates value.
ROI vs NPV vs IRR? ▾
ROI is simple and intuitive. NPV (Net Present Value) accounts for time value of money — better for long-term investments. IRR (Internal Rate of Return) finds the rate that makes NPV zero — useful for comparing projects of different scales.
How long to calculate ROI? ▾
Match the time horizon to the investment life. Equipment lasting 5 years: calculate 5-year ROI. Marketing campaign: measure actual revenue over 6-12 months. Always include ongoing costs.