ROI Calculator
Return on investment, annualised so you can compare a six-month project against a three-year one honestly.
Your details
Use 100% if you entered profit rather than revenue
Details
Anything spent each month to keep it running
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Return on investment
98.0%
$24,500 gained on $25,000 invested over 12 months
Includes your inputs, the full breakdown, and every row of the table.
Annualised return
98.0%
Comparable across time periods
Net gain
$24,500
Return on spend
3.60×
Revenue ÷ total cost
Payback period
6.1 months
To recover the upfront cost
- Revenue generated
- $90,000
- Gross profit at 55%
- $49,500
- Upfront investment
- − $25,000
- Ongoing costs
- − $0
- Net gain
- $24,500
What this means
- ROI compares the $24,500 you gained against the $25,000 you put in. It says nothing about how long that took, which is why the annualised figure matters — 98.0% over 1.0 years is a very different proposition from the same return in six months.
- Revenue is not profit. At a 55% gross margin, $90,000 of revenue is only $49,500 of gross profit, and that is what the return is measured against. Calculating ROI on revenue is the most common way marketing spend is made to look better than it was.
- Annualised return assumes the gain compounds smoothly across the period. For a one-off project that is a comparison device rather than a literal growth rate.
How the roi calculation works
Return on investment divides what you gained by what you spent. Its appeal is that it applies to anything — a machine, a hire, an ad campaign, a building — and its weakness is that it ignores time completely. A 50% return is excellent over a year and mediocre over five, but plain ROI reports both as 50%.
That is what the annualised figure corrects. By expressing the return as a compound annual rate, a three month campaign and a four year equipment purchase become directly comparable, and can also be measured against the alternatives — paying down debt at 9%, or leaving the money in the business.
The other trap is measuring against revenue instead of profit. Marketing reporting is full of impressive ROI figures built on revenue, but revenue is not yours to keep. A campaign returning three dollars of revenue for every dollar spent is losing money if the gross margin is 30%. Applying the margin first is the difference between a real return and a flattering one, and it is why return on ad spend and ROI are shown separately here.
None of this captures risk. A guaranteed 8% and a speculative 40% are not comparable on return alone, and ROI computed after the fact tells you what happened rather than what was likely to happen. It is a measure of outcome, not of judgment.
Frequently asked questions
How do I calculate ROI?
Subtract the total cost from the gain, then divide by the total cost. A $25,000 investment producing $49,500 of gross profit gives a net gain of $24,500 and an ROI of 98%. Use profit rather than revenue, or the figure will be badly overstated.
What is the difference between ROI and ROAS?
Return on ad spend divides revenue by spend and ignores costs entirely, so a 3× ROAS just means three dollars of revenue per dollar spent. ROI accounts for the cost of delivering that revenue. At a 30% margin, a 3× ROAS is barely break-even, which is why the two figures should never be used interchangeably.
Why annualise the return?
Because time is what makes returns comparable. Doubling your money in one year is a 100% annualised return; doubling it in five years is only about 15% a year. Without annualising, a slow investment can look identical to a fast one.
What is a good ROI for a small business?
The floor is whatever the money would earn elsewhere — paying down a 10% loan is a guaranteed 10% return, so any project must beat that to be worth doing. Beyond that it depends on risk. Marketing spend is usually expected to return several times its cost because much of it fails; equipment with predictable output can justify far less.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.