ROI Calculator — Calculate Return on Investment Instantly

Name: ROI Calculator
Author: James Blanckenberg

Last reviewed: 17 May 2026

Measure return on any business spend — marketing, equipment, training. Add a time period to get an annualised rate so you can compare investments of different lengths.

ROI equals net return minus investment, divided by the investment, times one hundred. Earning thirteen thousand five hundred back on a ten thousand investment is a thirty-five percent ROI.

How it works

Enter your initial investment (what you spent) and your net return (what came back). The calculator returns ROI as a percentage and net profit in cash. Add an investment period in months to also get an annualised ROI — essential for comparing a 6-month campaign against a 2-year purchase fairly.

Common mistakes

Counting revenue as the return — a campaign generating $50,000 from $10,000 spend looks like 400% ROI, but if COGS on that revenue was $35,000, the actual profit is $5,000 and the true ROI is -50%. Always use net profit (revenue minus the cost of fulfilling it), not gross revenue, in the numerator.
Not annualising for different durations — a 35% return over 18 months is not better than a 25% return over 12 months. Annualise both before comparing (18-month 35% = 22.5% annualised). Without annualisation, longer-duration investments look artificially stronger.
Ignoring the next-best alternative — a 30% ROI on a marketing investment looks good in isolation, but if paying down 12% debt would have been the alternative, the marketing only outperformed by 18%. Compare every investment to the opportunity cost (debt paydown, other projects, a cash reserve), not zero.

When to use this calculator

Use this for any discrete business spend with a measurable return: a marketing campaign, a piece of equipment, a training programme, a new software platform. It is the right tool for after-the-fact post-mortems and for go/no-go decisions on a single project.

If you care about how quickly the cash comes back (rather than total return), use the Payback Period Calculator. To value the whole business as an investment rather than a single project, the Business Valuation Calculator is the right tool.

See the formula

ROI (%) = ((Net Return − Initial Investment) / Initial Investment) × 100

Annualised ROI = ((1 + ROI/100) ^ (12/months) − 1) × 100

Example: Investment = $10,000 | Net Return = $13,500 | Period = 18 months
  ROI           = (3,500 / 10,000) × 100 = 35%
  Annualised    = ((1.35) ^ (12/18) − 1) × 100 = 22.5%

Worked example

A US small-business owner invests $15,000 over six months in a paid-search campaign for a local services business. Trackable revenue attributable to the campaign (via call-tracking and landing-page form submissions) totals $42,000. The business's gross margin on that revenue is 55%, so the actual gross profit generated by the campaign is $23,100. Net return after subtracting the $15,000 spend is $8,100.

ROI = $8,100 ÷ $15,000 = 54%. Because the period is six months rather than a full year, annualised ROI uses the compounding formula: (1.54)^(12/6) − 1 = 1.37, or 137% annualised. Both numbers matter — the headline 54% is what actually happened; the 137% annualised figure is what the business should compare against the next-best use of the same $15,000.

Benchmarks: 50% ROI on paid search is strong, especially for a local services business. Compare to alternative uses of the cash: an SBA 7(a) loan repayment at 11% interest, a money- market account at 5%, or a brand-new product line with unknown ROI but higher upside. The campaign should keep being funded as long as marginal ROI stays above those alternatives. The most common trap is measuring ROI on revenue rather than gross profit — at 55% gross margin, the same $42,000 of revenue would look like a 180% ROI if margin were ignored, dramatically overstating the campaign's value.

Frequently Asked Questions

What is ROI?

ROI (Return on Investment) is a measure of the profitability of an investment expressed as a percentage of the original cost. An ROI of 35% means you earned $35 in profit for every $100 invested. A positive ROI means the investment was profitable; a negative ROI means it was a loss.

How do I calculate ROI?

ROI (%) = ((Net Return − Investment Cost) / Investment Cost) × 100. Net Return is the total income or value generated. Investment Cost is what you paid. Example: invest $5,000, earn back $6,500 — ROI = (1,500/5,000) × 100 = 30%.

What is a good ROI for a small business?

A 15–30% annual ROI is considered good for most small business investments. Marketing campaigns with ROI above 100% (you earn back more than double what you spent) are excellent. Any positive ROI means the investment paid off more than doing nothing.

What is annualised ROI and when should I use it?

Annualised ROI converts a total ROI figure into an equivalent yearly rate, allowing you to compare investments held for different periods. Use it when comparing a 6-month investment against a 2-year investment on an equal basis.

How is ROI used in marketing?

Marketing ROI measures the revenue generated from a campaign relative to what it cost to run it. An ROI above 100% means the campaign returned more revenue than it cost. Most businesses target marketing ROI of 200–500% (earning $2–$5 for every $1 spent).

Should I include tax in ROI calculations?

Use pre-tax figures when comparing investments to keep the analysis consistent, then apply tax separately at the end. Tax rates differ by jurisdiction (US 21% federal, UK 25%, SA 27%) and by investment type (capital gains often taxed differently from operating profit). Calculating ROI gross-of-tax means the same investment looks the same in every region; tax adjustments are applied as a final layer when deciding actual cash retained.

What is the most common ROI mistake?

Counting revenue as the return instead of profit. A marketing campaign that generated $50,000 in revenue from $10,000 spend looks like 400% ROI — but if the COGS on that revenue was $35,000, the actual profit is $5,000 and the true ROI is negative 50%. Always use net return (revenue minus the costs of fulfilling that revenue), not gross revenue, in the numerator.

What if my ROI is negative or zero?

Negative ROI means the investment lost money — you got back less than you put in. Zero ROI means you broke even. Neither is automatically a failure: a marketing test with -10% ROI may have produced valuable customer insight, and a brand-building investment may have zero direct ROI but improve future conversion rates. Quantify the non-financial return before writing off the spend.

I have my ROI number — what should I do with it?

Compare it to two benchmarks. One: your hurdle rate — the minimum return you require for any investment, typically 15–20% annualised for small businesses. Below that, the cash is better deployed elsewhere. Two: the next-best alternative — if a marketing campaign returned 35% but a debt repayment would have saved 9% interest, the campaign wins. ROI is only useful when compared against an alternative use of the same money.

How is ROI different from payback period?

ROI measures the size of the return (percentage of money earned back). Payback period measures the speed of the return (months until you recover the original spend). A $10,000 investment returning $15,000 over 5 years has 50% ROI but 4-year payback. A $10,000 investment returning $12,000 over 12 months has only 20% ROI but 10-month payback. Use ROI for total returns, payback for cash-flow planning and risk.

Related calculators

Payback Period Calculator

How long until an investment pays for itself.

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Methodology & sources

Rates last verified: May 2026

Read the full methodology →

Simple ROI does not account for the time value of money. For investments held over multiple years, use the annualised ROI for fair comparison.

Rates are reviewed annually or when a region changes its headline rate. If you spot one that's out of date, email [email protected].

For information only. This calculator does not constitute financial, accounting, or tax advice. Consult a qualified professional before making business decisions.

Try these scenarios

Pre-filled examples — click any chip to load the inputs and result.

How to calculate return on investment (ROI)

Enter initial investmentThe total amount you spent upfront on the investment.
Enter net returnThe total return or revenue the investment generated.
Optionally enter the period in monthsAdd the investment period to see annualised ROI alongside total ROI.
Read ROI, net profit, and annualised rateThe calculator shows ROI as a percentage, net profit in cash, and the annualised rate for comparison against other investments.

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Written by

James Blanckenberg

Founder, BusCalcTools

Founder of BusCalcTools and FinnCalc. Builds practical financial calculators for small business owners and freelancers across the US, UK, and South Africa.

Editorial review by: James Blanckenberg, Founder & Editor

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