ROI Calculator

What Is ROI?

Return on Investment (ROI) measures the profitability of an investment relative to its cost. Expressed as a percentage, it allows you to compare the efficiency of different investments regardless of their size. A positive ROI means the investment gained value; a negative ROI means it lost value.

Simple vs Annualized ROI

Simple ROI shows total return without considering time. An investment that returns 100% over 10 years looks the same as one returning 100% over 1 year. Annualized ROI converts returns to an equivalent annual rate, enabling fair comparison across different time periods.

Marketing ROI and ROAS

Marketing ROI measures profit generated relative to marketing spend. ROAS (Return on Ad Spend) measures revenue per dollar spent. While related, they differ: ROAS of 4× means $4 revenue per $1 spent, but the ROI is 300% (profit of $3 per $1 spent).

ROI Limitations

ROI alone can be misleading. It doesn't account for risk — a 20% return from government bonds is very different from 20% from crypto. It doesn't consider the time value of money, opportunity costs, or the effort required to achieve the return.

Using ROI for Business Decisions

When choosing between projects, compare their expected ROIs adjusted for risk and time. A project with 50% ROI over 5 years may be less attractive than one with 30% ROI over 1 year, when annualized. Always consider the confidence level of your revenue projections.

ROI in HR and Training

Companies increasingly measure ROI on employee training and development. The formula compares the cost of training programs against measurable improvements in productivity, sales performance, or employee retention.