ROI Calculator

ROI formula

ROI = (Net profit/Total investment cost)x100

Here, Net Profit = Total Revenue - Total Investment Cost.

Note that net profit will be negative if you’ve incurred a loss.

When to calculate ROI

ROI should be calculated whenever you need to evaluate the financial return of a specific investment or marketing campaign. It’s particularly useful when comparing the profitability of multiple investments, allowing you to prioritize those with the highest ROI. You must particularly calculate your ROI after you’ve received the returns from an investment to understand if it was a good investment or a bad one.

Understanding the ROI result

Your ROI can be either positive or negative.

• Positive ROI: A positive ROI indicates that your investment is generating profit. The higher the ROI, the more profitable the investment.
• Negative ROI: A negative ROI means that your investment is not recovering its cost, and thus resulting in a loss. This signals the need to reassess the investment strategy.

How to calculate ROI with example

Suppose you invested $5,000 in a marketing campaign that generated $12,000 in revenue. You can calculate ROi as follows:

ROI = (Net profit/Total investment cost)x100

Net Profit = 12,000 - 5,000 = 7,000

ROI = 7,000/5,000 X 100 = 140%

In this example, your ROI is 140%, meaning you gained 140% of your initial investment, making it a highly profitable venture.

How to use the ROI calculator

To calculate your ROI, input the total revenue generated from your investment and the total cost of the investment. The tool will then calculate the ROI percentage, giving you a clear understanding of the profitability of your investment.