ROI Calculator
Calculate return on investment for any purchase or project.
Frequently Asked Questions
What is ROI and how is it calculated?
ROI (Return on Investment) measures how much profit or loss an investment generates relative to its cost. Formula: ROI = ((Final Value − Initial Cost) ÷ Initial Cost) × 100. A $500 gain on a $2,000 investment = 25% ROI. Positive ROI means you made money; negative means a loss.
What is a good ROI?
It depends heavily on asset class and time horizon. The S&P 500 has historically returned ~10% annually (7% after inflation). Real estate typically returns 8–12% including appreciation. HYSAs offer 4–5% with near-zero risk. Always compare your expected ROI against the next best alternative — your opportunity cost.
What is the difference between ROI and annualised ROI (CAGR)?
Plain ROI ignores how long the investment took. A 50% ROI over 10 years is far less impressive than 50% in 2 years. Annualised ROI (CAGR — Compound Annual Growth Rate) normalises returns to a per-year basis: CAGR = (Final ÷ Initial)^(1/years) − 1. This lets you compare investments held for different durations.
How do I calculate marketing ROI?
Marketing ROI = ((Revenue from campaign − Marketing cost) ÷ Marketing cost) × 100. Spent $5,000 on ads and generated $20,000 in attributable revenue? Marketing ROI = (($20,000 − $5,000) ÷ $5,000) × 100 = 300%. Accurate attribution via UTM tracking is the hard part.
What are the limitations of ROI as a metric?
ROI does not account for: (1) the time value of money — 20% in 5 years is worth less than 20% in 1 year; (2) risk — two investments with the same ROI may have very different risk profiles; (3) liquidity. For multi-year comparisons, use annualised ROI or Net Present Value (NPV) alongside plain ROI.