ROI Calculator
See how much an investment, project or ad campaign really made you: the return as a %, the return per year, and the profit after fees and tax.
What you sold it for, or what it is worth now.
Fees: commission, stamp duty, legal costs. Costs each year: fund or platform fees, upkeep, insurance. Income: dividends, rent or interest you received in total.
Shows the amount you'd need back to reach it.
The investment above is A. Fill in B and C to rank all three by their yearly return.
The share of each sale left after the cost of the goods or service. Use 100% to count all revenue as profit.
Agency fees, design, tools, staff time.
Gives the cost per sale and the most you can pay for one.
Shows the revenue you'd need.
Value over time
How your ROI is worked out
ROI = net profit ÷ total cost × 100.
- 1
Money in
You put in= $10,000
- 2
Net profit
$15,000 − $10,000= $5,000
- 3
ROI
$5,000 ÷ $10,000= 50%
- 4
Each year
1.5 ^ (1 ÷ 5) − 1= 8.45% a year
Read more: the formula, worked examples, annualised ROI, marketing ROI, ROAS and payback
Return on investment (ROI) tells you how much you made compared with what you put in. It works for shares, property, a new machine, a business project or an ad campaign. The annualised ROI turns it into a yearly figure so you can compare things held for different lengths of time.
The formula
total cost = amount invested + buying fees + (costs each year × years)
money out = amount returned + income received − selling fees
net profit = money out − total cost − tax on a profit
ROI = net profit ÷ total cost × 100
annualised ROI = (1 + ROI)^(1 ÷ years) − 1
simple yearly ROI = ROI ÷ years
real yearly return = (1 + annualised ROI) ÷ (1 + inflation) − 1
payback = years × total cost ÷ (total cost + net profit)
amount back for a target = total cost × (1 + target ROI) (before fees, income and tax)
Worked example
You invest $10,000 and five years later it is worth $15,000. The net profit is $15,000 − $10,000 = $5,000, so the ROI is $5,000 ÷ $10,000 = 50%. Every $1 became $1.50. Spread over 5 years, that is 1.5^(1 ÷ 5) − 1 = 8.45% a year. The simple yearly figure, 50% ÷ 5 = 10%, overstates it because it ignores that growth builds on growth. If the money had come back evenly ($3,000 a year), you would have your $10,000 back after 5 × $10,000 ÷ $15,000 = 3.33 years, or 3 years 4 months.
With fees, income and tax
Say the same investment cost $100 to buy, $50 to sell and $20 a year in fees, paid $600 in dividends, and 20% tax is due on the profit. Total cost is $10,000 + $100 + $20 × 5 = $10,200. Money out is $15,000 + $600 − $50 = $15,550, so the profit before tax is $5,350. Tax takes $1,070, leaving $4,280. The ROI drops to $4,280 ÷ $10,200 = 41.96%, or 7.26% a year.
Inflation and the real return
If prices rose 3% a year, the real yearly return is 1.0845 ÷ 1.03 − 1 = 5.29%. That is how much more you can actually buy each year.
Target ROI
To make 60% on $10,000 you need $10,000 × 1.6 = $16,000 back. For 10% a year over 5 years you need $10,000 × 1.1^5 = $16,105.10. With tax, the profit you want after tax is divided by (1 − tax rate) first.
Marketing ROI and ROAS
A campaign costs $1,000 in ads and brings in $5,000 of sales. ROAS is $5,000 ÷ $1,000 = 5. The simple "revenue" ROI is ($5,000 − $1,000) ÷ $1,000 = 400%, but that ignores what the goods cost. With a 40% gross margin, the sales leave $5,000 × 40% = $2,000, so the real profit is $2,000 − $1,000 = $1,000 and the ROI on profit is 100%. To break even you need $1,000 ÷ 40% = $2,500 of sales, a ROAS of 2.5. In general, break-even ROAS = 1 ÷ gross margin (with only ad costs).
| Gross margin | ROAS to break even |
|---|---|
| 20% | 5 |
| 25% | 4 |
| 40% | 2.5 |
| 50% | 2 |
| 80% | 1.25 |
Comparing investments
Rank investments by their annualised ROI, not the total. $5,000 turned into $6,000 in one year is a 20% ROI, which beats the 8.45% a year from the 5-year example, even though 50% looks bigger.
The value-over-time chart assumes steady growth between the start and the end. Real investments go up and down, and money paid in or taken out at different times needs an XIRR (try the CAGR calculator). Tax here is a flat % of a profit; real tax rules depend on your country and the type of investment.
Common questions
How do you calculate ROI?
Take the net profit, which is what you got back minus everything you paid in, and divide it by what you paid in. Multiply by 100 for a percentage. If you invest $10,000 and get $15,000 back, the profit is $5,000 and the ROI is $5,000 ÷ $10,000 = 50%.
What is annualised ROI?
It is the steady yearly return that would turn your money into the same end amount, so you can compare investments held for different lengths of time. A 50% ROI over 5 years is (1.5)^(1/5) − 1 = 8.45% a year, not 10% a year, because each year’s growth builds on the last.
What is a good ROI?
It depends on the risk and the time. Compare the annualised ROI with what you could get elsewhere for a similar risk, such as a savings account or an index fund, and take off inflation to see the real return. A 50% ROI sounds big, but over 5 years it is 8.45% a year.
What is the difference between ROI and ROAS?
ROAS (return on ad spend) is revenue ÷ ad spend: $5,000 of sales from $1,000 of ads is a ROAS of 5. ROI looks at profit instead: with a 40% gross margin those sales leave $2,000, so the profit is $1,000 and the ROI is 100%. You break even at a ROAS of 1 ÷ margin, here 2.5.
Should fees and taxes be included in ROI?
Yes, for a true picture. Add buying fees and yearly costs to what you paid in, take selling fees off what you got back, add any income such as dividends or rent, and take off tax on the profit. Leaving them out makes the ROI look better than the money you really keep.
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