ROI Calculator
This ROI calculator measures what any business investment actually earned. Enter what you put in and what came back — ad spend, inventory, equipment, a new hire — and get the return on investment as a percentage, plus an annualized figure so a 6-month win can be compared fairly against a 2-year one. Use it to rank competing uses of your money.
Total cash put in: spend, inventory cost, equipment, etc.
Total cash that came back, including the original investment.
How long the investment took to produce the return. Used for annualizing.
ROI
50%
- Net gain
- 500
- Total returned
- 1,500
- Annualized ROIThe 12-month result compounded to a yearly rate for fair comparison.
- 50%
How it was calculated
- Net gain: $1500.00 − $1000.00 = $500.00.
- ROI: $500.00 ÷ $1000.00 × 100 = 50.0%.
- Annualized: (1 + 0.5000)^(12/12) − 1 = 50.0%.
How it works
ROI = (total returned − amount invested) ÷ amount invested × 100. Invest $1,000, get back $1,500: ($500 ÷ $1,000) = 50% ROI.
Net gain is the dollar profit; ROI is that profit as a percentage of what you risked.
Annualized ROI compounds the result to a 12-month rate: (1 + ROI)^(12 ÷ months) − 1. A 30% gain in 6 months annualizes to 69%, beating a 50% gain over 12 months on pace.
Annualizing assumes gains could compound at the same rate, which is an approximation — treat it as a comparison tool, not a promise.
Worked examples
$1,000 inventory buy returning $1,500 in 12 months
Net gain = $500. ROI = 50%. Annualized = 50% (already a full year). Every dollar invested earned fifty cents of profit.
$2,000 ad test returning $2,600 in 6 months
Net gain = $600. ROI = 30%. Annualized = (1.30)² − 1 = 69% — on pace, this beats the 50% twelve-month investment above, which raw ROI alone would hide.
How to measure
- Count ALL of the investment: ad spend plus creative, fees and your time valued honestly.
- Measure return net of direct costs where possible — revenue-based ROI flatters thin-margin investments.
- Use the same time window for compared investments; annualization helps but real windows are better.
- Include failures in the average: one 200% winner and two −100% losers is a 0% portfolio.
- Revisit ROI after returns fully arrive — early reads on slow-payback investments mislead.
Assumptions & limitations
Planning estimate
- Annualized ROI assumes compounding at a constant rate, which rarely holds in practice.
- The time value of money and risk differences between investments are not modeled.
- This is a planning estimate, not investment or financial advice.
Frequently asked questions
(Gain − cost) ÷ cost × 100. Spend $1,000 and get $1,500 back: ($500 ÷ $1,000) × 100 = 50% ROI. Note the "gain" here means total returned, not profit — subtract the investment first.
Any positive ROI beats losing money, but "good" is relative to alternatives and risk. A 20% ROI in 3 months (over 100% annualized pace) crushes a 30% ROI over two years. Compare annualized figures against what else your money could do.
Yes — when the total returned is less than invested. A $5,000 campaign returning $4,500 is a −10% ROI. Negative ROI is common in testing phases; the question is whether learnings make the next round positive.
ROAS (revenue ÷ ad spend) manages ad campaigns day to day. ROI ((return − cost) ÷ cost) judges whether the whole investment was worth it. A campaign can have great ROAS and poor ROI once creative, fees and product costs are included.
Because time matters: 30% in 6 months is a faster machine than 40% in 18 months. Annualizing converts both to a yearly pace — 69% vs ~26% — so different-duration investments can be ranked fairly.