ROI Calculator
Use our free ROI calculator to calculate your return on investment, with a simple ROI calculation formula tool.
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Return on investment (total)Total
What is ROI?
ROI stands for “Return on Investment” and is a metric businesses and individuals use to work out how much revenue they can generate when considering the costs of generating that revenue.
For example, if you spend $1000 on a sales promotion that generates $3000, your ROI is 200%, or $2000.
ROI doesn’t just have to refer to profits. It can also refer to other measures, like time.
ROI formula
Your return on investment (percentage): (100 ÷ The amount you invested × The amount of revenue you generated) − 100
Your return on investment (total): Amount you generated − amount you invested
ROE vs. ROI
ROE
- Measures profitability of an investment relative to the shareholder’s equity.
- Demonstrates how efficiently a company uses invested capital.
- Calculated as: Net Income ÷ average shareholder’s equity
- Focused on investors, specifically shareholders.
- Used to assess company performance and compare against peers.
ROI
Measures profitability relative to a more general investment amount.
Shows the overall efficiency of utilizing company resources.
Calculated as: (Net [profit − initial investment) ÷ cost of investment
Relevant to broader stakeholders, including investors and managers.
Used to evaluate specific projects, marketing campaigns, etc.
How and when to use ROI
ROI is a valuable decision-making tool. Use it to evaluate the potential profitability of different investment decisions, such as a new product line, marketing campaign or equipment upgrade.
Calculate ROI before making significant financial commitments to compare options and forecast which will yield the highest rate of return.
Additionally, you can track ROI after an investment to measure its ongoing performance and success in terms of capital gains.
ROI calculator FAQs
