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ROI Calculator

Calculate the return on investment from what you put in and what you got back. Add the investment length and the ROI calculator also gives the annualized return.

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Adds the annualized return

Return on investment
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Estimate only. Not financial advice.

How to use the ROI Calculator

  1. Enter the Amount invested and the Amount returned.
  2. Optionally, enter the Investment length in years.
  3. Press Calculate. The ROI appears with the gain or loss, the annualized ROI, and the return multiple.

How it works

ROI = (returned − invested) ÷ invested
annualized ROI = (1 + ROI)^(1 ÷ years) − 1
multiple = returned ÷ invested

Examples

  • $10,000 invested and $15,000 returned: 50% ROI, a $5,000 gain and a 1.5× multiple.
  • If that took 3 years, the annualized ROI is 1.5^(1/3) − 1 = 14.47% a year.
  • $8,000 invested and $6,000 returned: −25% ROI, a $2,000 loss. Over 2 years that is −13.40% a year.
  • A $2,000 marketing campaign that brought in $5,000 of gross profit: 150% ROI.

Why annualize?

A 50% return sounds better than a 20% return, but not if the first took 5 years and the second 1. Annualizing puts investments of different lengths on the same yearly basis so you can compare them fairly.

50% over 5 years works out to 8.45% a year, while 20% in one year is 20%. The annualized figure is the same thing as a compound annual growth rate, so it compares directly with the yearly rate on a savings account or the long-run return of a fund. The CAGR calculator can also run it in reverse and project a future value.

What to count as the cost and the return

ROI is only as good as the two numbers you feed it. The amount invested should hold everything you paid to get the result: the purchase price, fees, commissions, and for a business project the staff time and tools. The amount returned is what you ended up with, such as the sale price, the dividends received, or the extra profit a project brought in.

For marketing, use profit rather than sales. A campaign that cost $2,000 and brought in $5,000 of sales did not return 150% if the products cost $3,000 to make. Count only the gross profit, $2,000 in that case, and the ROI is 0%.

ROI ignores time unless you add it. If the money was tied up for years, enter the investment length so the calculator can show the annualized return next to the total.

ROI and ROAS

Advertisers often quote ROAS, return on ad spend, instead of ROI. ROAS divides revenue by ad spend, so $5,000 of sales from $1,000 of ads is a ROAS of 5, or 500%. ROI divides the profit left after all costs by those costs. A campaign can have a healthy ROAS and still lose money once product costs are taken out. The ROAS calculator works out the advertising figure.

Limitations

  • Taxes, fees, and inflation are not subtracted unless you include them in the amounts.
  • Cash added or taken out partway through is not handled.

Frequently asked questions

How is ROI calculated?

Subtract the cost from the return, divide by the cost, and multiply by 100.

What is a good ROI?

It depends on risk and time. Compare the annualized figure with alternatives such as an index fund or a savings rate.

Can ROI be negative?

Yes. If you got back less than you put in, ROI is negative.

How do I calculate annualized ROI?

Divide the amount returned by the amount invested, raise the result to the power of 1 divided by the number of years, and subtract 1. $15,000 back on $10,000 over 3 years is 1.5^(1/3) − 1, or 14.47% a year.

What is the difference between ROI and ROAS?

ROI uses profit after all costs. ROAS divides revenue by ad spend only, so it ignores what the products cost to make or deliver.

Often used together with ROI Calculator.