ROI Calculator

What is return on investment?

Return on investment, or ROI, tells you how much you gained or lost on an investment relative to what you put in, shown as a percentage. It is one of the most widely used yardsticks in business and personal finance because it lets you compare very different investments on the same scale.

One thing to keep in mind: basic ROI does not account for how long the investment took. A 50% return in one year is far better than a 50% return spread over ten years, even though the ROI figure is the same.

How to use this calculator

1. Enter the total cost of the investment, including all expenses.
2. Enter the total gain or return you received from the investment.
3. The calculator subtracts cost from gain to find profit.
4. It then divides by cost and multiplies by 100 to give ROI as a percent.

The formula explained

The formula \(\text{ROI} = \frac{\text{Gain} - \text{Cost}}{\text{Cost}} \times 100\) computes the percentage return relative to the amount invested. A positive result means profit, while a negative result means a loss.

• \(\text{ROI}\) = return on investment, expressed as a percent
• \(\text{Gain}\) = the total amount received from the investment
• \(\text{Cost}\) = the total amount spent on the investment

Step by step method

1. Find the profit by subtracting \(\text{Cost}\) from \(\text{Gain}\).
2. Divide that profit by \(\text{Cost}\) to compare it with the original investment.
3. Multiply by \(100\) to convert the result into a percent.

Worked example

Problem. You spend \(\$200\) on a small ad campaign and it brings in \(\$260\) in sales. What is the ROI?

1. Profit is \(260 - 200 = 60\).
2. Divide by cost, \(\frac{60}{200} = 0.3\).
3. Multiply by \(100\), so \(0.3 \times 100 = 30\).

Tips and common mistakes

• Make sure \(\text{Cost}\) includes every expense tied to the investment, not just the main purchase price.
• ROI can be negative if \(\text{Gain} < \text{Cost}\), which means the investment lost money.

Frequently asked questions