ROI Calculator
Calculate your return on investment instantly with our free ROI calculator. Perfect for evaluating business investments, marketing campaigns, and financial decisions.
Formula:
ROI = ((Final Value - Initial Investment) / Initial Investment) × 100
What is ROI (Return on Investment)?
Return on Investment (ROI) is a fundamental financial metric that measures the profitability of an investment relative to its cost. It's expressed as a percentage and helps businesses and investors understand how effectively their money is being used to generate returns.
ROI is one of the most widely used profitability metrics because of its versatility and simplicity. Whether you're evaluating a marketing campaign, a new piece of equipment, a training program, or a stock investment, ROI provides a standardized way to compare different opportunities and make informed decisions.
The basic ROI formula is: ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. A positive ROI indicates profit, while a negative ROI indicates a loss.
Common ROI Calculator Use Cases
Marketing ROI
Calculate the return on marketing campaigns, ad spend, content creation, and promotional activities to optimize your marketing budget allocation.
Business Investments
Evaluate the profitability of equipment purchases, software implementations, facility improvements, and other business investments.
Stock & Real Estate
Measure returns on stock portfolios, real estate properties, rental income, and other financial investments to track portfolio performance.
Project Evaluation
Assess the potential return of new projects, product launches, process improvements, and strategic initiatives before committing resources.
How to Use This ROI Calculator
- Enter your initial investment: This is the total amount you invested or spent at the beginning.
- Enter the final value: This is what you received or the current value of your investment.
- Click "Calculate ROI": The calculator will instantly show your ROI percentage and profit amount.
- Interpret the results: A positive percentage means profit, while a negative percentage indicates a loss.
Frequently Asked Questions
What is ROI and why is it important?
ROI (Return on Investment) is a performance metric used to evaluate the profitability of an investment. It measures the return on an investment relative to its cost. ROI is important because it helps businesses make informed decisions about where to allocate resources and which investments generate the best returns.
How do you calculate ROI?
ROI is calculated using the formula: ROI = ((Final Value - Initial Investment) / Initial Investment) × 100. For example, if you invest $1,000 and receive $1,500, your ROI would be ((1,500 - 1,000) / 1,000) × 100 = 50%.
What is a good ROI percentage?
A good ROI depends on your industry and investment type. Generally, an ROI above 10% is considered good for business investments, while marketing campaigns might aim for 5:1 (500% ROI) or higher. Real estate investments typically target 8-12% annual ROI.
What's the difference between ROI and profit margin?
ROI measures the return relative to the initial investment, while profit margin measures profit as a percentage of revenue. ROI focuses on the efficiency of an investment, whereas profit margin focuses on operational profitability.
Can ROI be negative?
Yes, ROI can be negative when the final value is less than the initial investment, indicating a loss. For example, if you invest $1,000 and only get back $800, your ROI would be -20%.