ROI Calculator
Return on investment (ROI) measures the financial efficiency of a decision — how much profit you generated relative to the cost of generating it. It is one of the most universal metrics in business and finance, used to compare marketing campaigns, evaluate capital expenditures, assess business acquisitions, and measure the performance of investments. The higher the ROI percentage, the more value was generated per unit of money invested.
Enter the total investment cost and the total gain (or current value) from that investment. The calculator shows the net profit (gain minus investment) and the ROI percentage. If you invested £10,000 and received £14,000 in return, the net profit is £4,000 and the ROI is 40%. A negative ROI means the investment returned less than it cost — a loss. ROI is always expressed relative to the original investment, which makes it easy to compare decisions of very different sizes.
ROI has important limitations worth understanding. It does not account for the time value of money — a 40% return over one year is far better than 40% over ten years. It also ignores risk and does not distinguish between different types of gain (cash, equity, non-monetary benefits). For comparing investments held over different timeframes, annualised ROI is more informative. Despite these limitations, simple ROI remains an excellent first-pass metric for evaluating business decisions and communicating investment performance to stakeholders.
Formula
Net Profit = Gain − Investment ROI % = (Net Profit ÷ Investment) × 100
ROI measures the efficiency of an investment. Subtract the cost from the gain to find net profit, then divide by the original investment and multiply by 100 to express it as a percentage.
Worked Examples
Frequently Asked Questions
What is a good ROI?▾
A good ROI depends on context. In stock markets, 7–10% annual ROI is considered average long-term. For marketing campaigns, a 5:1 ratio (400% ROI) is widely cited as a reasonable digital marketing benchmark. For real estate, 8–12% annually is typical. For business investments, the benchmark is typically the cost of capital or the opportunity cost of alternative uses of the money.
Can ROI be negative?▾
Yes. A negative ROI means you lost money — the gain was less than the investment. For example, investing £1,000 and getting back £800 gives an ROI of −20%. Negative ROI does not always indicate a bad decision — some investments generate non-financial value or strategic benefits — but it does mean the financial return alone does not justify the cost.
What is the difference between ROI and profit margin?▾
ROI measures the return relative to the investment cost. Profit margin measures profit relative to revenue. ROI tells you how efficiently money was deployed; margin tells you how much of each sale is profit. A business can have high margins but poor ROI (if the investment required was very large), or low margins but good ROI (if the investment was very small).
How do I calculate ROI on a marketing campaign?▾
Subtract the total campaign cost from the revenue it generated, then divide by the campaign cost. If a £2,000 campaign generates £10,000 in attributed revenue: (£10,000 − £2,000) ÷ £2,000 = 400% ROI. The main challenge is attribution — accurately connecting revenue to the specific campaign that drove it, especially in multi-channel environments.
What is a good ROI for a marketing campaign?▾
A 5:1 revenue-to-spend ratio (400% ROI) is a common benchmark for digital marketing, meaning you generate £5 for every £1 spent. A 10:1 ratio (900% ROI) is excellent. However, benchmarks vary by channel — email marketing typically delivers higher ROI than paid ads. Attribution accuracy also matters significantly, as multi-touch customer journeys make single-channel ROI difficult to measure precisely.
How is annualised ROI calculated?▾
Simple ROI does not account for the time period of the investment. Annualised ROI adjusts for this: Annualised ROI = (1 + ROI)^(1/n) − 1, where n is the number of years. For example, a total ROI of 40% over 2 years corresponds to an annualised ROI of approximately 18.3% per year. Annualised ROI is more useful when comparing investments held for different lengths of time.
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All calculations are for informational purposes only. They should not replace professional financial, tax, or legal advice. Always consult a qualified professional for decisions affecting your finances or business.