Learn how to calculate Return on Investment (ROI) with our complete guide. Covers the ROI formula, gain calculator, cost calculator, and investment comparison tools.
What is ROI?
Return on Investment (ROI) is a financial metric that measures the profitability of an investment relative to its cost. It's one of the most widely used performance measures in business and finance.
ROI helps you answer a simple question: "Was this investment worth it?" A positive ROI means profit, and a higher ROI means better performance.
The ROI Formula
Where Gain = the total return or revenue from the investment, and Cost = the total amount invested.
For example: Invest $5,000, earn $10,000 → ROI = ($10,000 − $5,000) ÷ $5,000 × 100 = 100%. You doubled your money.
How to Calculate ROI
Use our ROI Calculator to instantly calculate your ROI. Simply enter your gain (revenue/return) and cost (investment amount), and we'll calculate the ROI percentage, ratio, and net profit.
Gain Calculator
Need to know how much revenue to generate? Enter your investment cost and target ROI, and we'll calculate the required gain. For example, with a $5,000 investment and 100% target ROI, you need $10,000 in gain.
Cost Calculator
Want to know the maximum you can invest? Enter your expected gain and target ROI, and we'll calculate the maximum cost. For example, expecting $10,000 gain with 100% target ROI means you can invest up to $5,000.
Comparing Investments
Our Compare Investments tool lets you evaluate up to 5 investments side-by-side. Enter the gain and cost for each, and we'll automatically sort by ROI to show you the best performer.
ROI vs ROAS
ROI measures total profitability including all costs. ROAS (Return on Ad Spend) specifically measures advertising efficiency. Use ROI for overall business decisions and ROAS for campaign optimization.
📈 Case Study: Marketing Campaign ROI Analysis
An e-commerce brand spends $20,000 on a Google Ads campaign and generates $65,000 in revenue. The product cost is $25,000 and overhead is $5,000.
| Metric | ROAS View | ROI View |
|---|---|---|
| Revenue | $65,000 | $65,000 |
| Ad Spend | $20,000 | $20,000 |
| Product + Overhead | Not included | $30,000 |
| Result | 3.25:1 ROAS | 50% ROI |
The campaign looks great from a ROAS perspective (3.25:1), but after accounting for all costs, the ROI is 50% — still solid, but much more modest. This is why you need both metrics.
Common ROI Mistakes
- Ignoring time value of money: A 100% ROI over 1 year is far better than 100% over 10 years. Use CAGR for time-period comparisons.
- Not including all costs: Salary, tools, overhead, and opportunity costs all matter. Missing them inflates your ROI.
- Comparing ROI across different time periods: Annualize your ROI (using CAGR) before comparing investments of different durations.
- Using ROI for everything: For some decisions (like ad campaigns), ROAS is more appropriate. Use the right metric for the right decision.