ROI Calculator
Calculate Return on Investment as a percentage from cost and total return.
Understanding Return on Investment
ROI is a simple, widely used metric that measures the profitability of an investment. It expresses the gain or loss relative to the cost as a percentage.
The Formula
ROI = ((Gain − Cost) / Cost) × 100%
A positive ROI means the investment earned money; a negative ROI means it lost money.
Examples
| Investment | Cost | Return | ROI |
|---|---|---|---|
| Stock purchase | $10,000 | $15,000 | 50% |
| Marketing campaign | $5,000 | $12,000 | 140% |
| Equipment upgrade | $20,000 | $18,000 | −10% |
Limitations
ROI does not account for time. A 50% ROI over 1 year is far better than 50% over 10 years. For time-adjusted comparisons, use CAGR or annualized return instead.
Frequently Asked Questions
What is a good ROI?
It depends on the context. For stocks, 10% annually is a common benchmark. For business investments, anything above 15–20% is often considered good. Real estate typically targets 8–12%.
Can ROI be negative?
Yes. A negative ROI means you lost money on the investment. For example, if you spent $10,000 and received $8,000 back, the ROI is −20%.
How is ROI different from profit margin?
ROI measures the return relative to the investment cost. Profit margin measures profit relative to revenue. They answer different questions: ROI evaluates investment efficiency, while margin evaluates pricing efficiency.