How to Calculate ROI (Formula, Examples & Free Calculator)

To calculate ROI (return on investment), use ROI = (net profit ÷ cost of investment) × 100, where net profit is what you gained minus what you spent. Invest $1,000 and end with $1,300? That's a $300 gain ÷ $1,000 = 30% ROI. Here's the formula in full, worked examples, the ROI-vs-ROAS distinction, and a free ROI calculator to run your own numbers.

The ROI formula

ROI = (net profit ÷ investment cost) × 100, or equivalently (final value − initial cost) ÷ initial cost × 100. The result is a percentage: positive means profit, negative means loss, and 0% means you broke even. The ROI Calculator gives you the number instantly — enter the amount invested and the amount returned.

Worked examples

• Marketing spend: $2,000 in ads → $5,000 in sales. ($5,000 − $2,000) ÷ $2,000 × 100 = 150% ROI.
• Equipment: a $4,000 machine saves $6,000. ($6,000 − $4,000) ÷ $4,000 × 100 = 50% ROI.
• A loss: $1,000 invested returns $800. ($800 − $1,000) ÷ $1,000 × 100 = −20% ROI.

What counts as a good ROI?

It depends entirely on the alternative and the risk. As rough context, the stock market has historically returned about 7–10% per year, so a long-term investment that beats that is doing well. Marketing and business projects usually target much higher because they carry more risk and effort. Always compare an ROI against what the same money and time would earn elsewhere.

ROI vs ROAS vs profit margin

• ROI — profit against total cost; the whole-picture percentage.
• ROAS — revenue (not profit) against ad spend only; a faster, channel-level check. See what a good ROAS is and the ROAS Calculator.
• Profit margin — profit as a share of revenue, not of cost. Work it out with the Profit Margin Calculator.

They answer different questions — use ROI for "was this worth it?", ROAS for "is this channel efficient?", and margin for "how much of each sale do I keep?"

The catch: ROI ignores time

A 30% ROI over one month is spectacular; the same 30% over ten years is poor. Basic ROI has no time dimension, so for multi-year investments use annualized ROI to compare fairly. For quick project and campaign comparisons over similar timeframes, plain ROI is perfect.

How to improve ROI

• Cut the cost side — the denominator — by removing waste before spending more.
• Lift the return — higher conversion or order value grows the numerator; track it with the Conversion Rate Calculator.
• Kill losers fast — move budget from negative-ROI activities to proven ones.

Bottom line

ROI = (net profit ÷ cost) × 100 — a single percentage that tells you whether something paid off. For multi-year bets, annualize it; for everything else, run it through the free calculator.