ROI Calculator

Return on investment, net profit, and annualized ROI for any purchase or campaign

Updated 2026-09-28

Amount invested (total cost)

Amount returned (profit produced + value left)

Period

months

Net gain: $3,500.00
ROI: 35.0%
Annualized ROI: 16.2%

ROI = (returned − invested) ÷ invested. Annualized ROI = (returned ÷ invested)^(12 ÷ months) − 1, so projects of different lengths compare fairly.

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Return on investment answers one question: for every dollar put in, how many came back? It works for a new piece of equipment, an ad campaign, a new product line, or a hire. The calculator gives the simple ROI and the annualized figure, which matters as soon as you compare a three-month project with a three-year one.

How ROI is calculated

ROI = (amount returned − amount invested) ÷ amount invested × 100. Spend $10,000 and get $13,500 back and the net gain is $3,500, so ROI is 35%.

The amount returned should be what the investment actually produced for the business: extra gross profit from the sales it drove, costs it saved, or the resale value of an asset. Revenue alone overstates the return, because the goods you sold still cost money.

Why annualized ROI matters

A 35% return over two years is not the same as 35% in one year. Annualized ROI converts any period into an equivalent yearly rate: (1 + ROI) ^ (12 ÷ months) − 1. The 35% over 24 months works out to about 16.2% a year.

Use the annualized figure whenever you compare options that tie up money for different lengths of time. A small, fast return you can reinvest often beats a large, slow one.

The same 35% ROI annualized over different periods
Period	Simple ROI	Annualized ROI
6 months	35%	82.3%
12 months	35%	35.0%
24 months	35%	16.2%
36 months	35%	10.5%

Counting the full investment

ROI is only as honest as the cost side. Include everything the project consumed:

The purchase price, plus delivery, installation, and setup
Staff time spent on the project, at a real hourly cost
Software subscriptions, fees, and training that came with it
Financing costs, if you borrowed to pay for it
Ongoing running costs over the period you are measuring

Marketing ROI in practice

For an ad campaign, the return is the gross profit on the sales the campaign produced, not the sales total. $2,000 of ads that bring in $8,000 of sales at a 40% gross margin return $3,200 of gross profit. The ROI is (3,200 − 2,000) ÷ 2,000 = 60%, not 300%.

If some of those customers come back and buy again, their later purchases are part of the return too. The customer lifetime value calculator estimates that figure.

What ROI does not tell you

ROI ignores risk and cash timing. A guaranteed 12% and a speculative 40% are not equivalent, and a project that pays back in month two is safer for a small business than one that pays everything back in month 23, even at the same ROI. Pair the ROI figure with a payback period and your cash flow forecast before committing money.

Keep the numbers in a spreadsheet

Ready-made Excel and Google Sheets templates that pick up where this calculator stops. One-off purchase, instant download.

Simple Profit & Loss (P&L) Statement Spreadsheet
Log transactions; get a monthly and yearly P&L with margins.
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12-Month Cash Flow Forecast & Business Budget Spreadsheet
Sales with growth, seasonality and collection timing, every expense, closing cash, low-cash alerts and variance.
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Frequently asked questions

What is a good ROI for a small business investment?

There is no single benchmark. Compare against what else the money could do: paying down a loan at 10% is a guaranteed 10% return, so a risky project needs a clearly higher expected ROI to be worth it.

Should I use revenue or profit as the return?

Profit. Use the gross profit the investment produced, or the costs it saved. Using revenue treats the cost of the goods you sold as if it were a gain.

What is annualized ROI?

The yearly rate that would compound to the same total return over the period. It lets you compare investments that run for different lengths of time.

Can ROI be negative?

Yes. If you got back less than you put in, ROI is negative — a return of $8,000 on $10,000 is −20%.

Is ROI the same as profit margin?

No. ROI divides the gain by the amount invested; margin divides profit by the selling price. They answer different questions.

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