How do you calculate ROI?

Subtract what you paid from what you got back, divide by what you paid, and multiply by 100. Paid {{$2000}}, got {{$2600}}: ({{$2600}} − {{$2000}}) ÷ {{$2000}} × 100 = 30%. Enter cost and final value above and the page shows the working, the gain and the multiple.

It depends on the time taken and the risk. A 50% ROI over one year is exceptional; over fifteen years it is under 3% a year, less than a savings account. Compare the annualised rate against what a low-risk alternative paid over the same period, not the headline percentage.

What is the difference between ROI and CAGR?

ROI is the total return over the whole holding period, with no time in it. CAGR is the annual compound rate that produces that total over the years held. A 100% ROI over 5 years is a 14.87% CAGR; over 10 years, 7.18%. The page gives both when you enter the years.

How do I calculate ROI for a business or marketing spend?

The same way: gain attributable to the spend, minus the spend, divided by the spend. A campaign costing {{$5000}} that brought {{$8000}} of profit has an ROI of ({{$8000}} − {{$5000}}) ÷ {{$5000}} = 60%. Managerial accounting texts define a division's ROI as operating income ÷ assets invested — the same ratio at a larger scale.

Is a 50% ROI the same as 50% profit margin?

No. ROI divides the gain by what was invested; margin divides profit by revenue. A shop can earn a 20% margin on each sale and a 60% ROI on its capital if that capital turns over three times a year.

ROI Calculator (Return on Investment, with Annualised Rate)

Return on investment as a percentage of what you put in, with the gain, the multiple and the annualised rate if you give the years.

Inputs

CurrencyAuto (USD)

Cost / investment

$10$1,030,900

Final value

$0$1,030,900

Years held (optional, for the annualised rate)

0100

Leave at 0 for plain ROI.

Include CalculateEveryday mark

ROI

50.00%

Cost$10,000

Final value$15,000

+50%

Working: (final value − cost) ÷ cost × 100 = 50.00%
Final value: $15,000
Cost: $10,000
Net gain: $5,000
Multiple of the cost: 1.50×
Annualised over 3 years (CAGR): 14.47% a year

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What each ROI input means

Cost / investment: What you put in: the purchase price plus costs such as fees, commissions and repairs.
Final value: What it is worth or returned at the end — the sale price plus any income it paid along the way.
Years held (optional, for the annualised rate): How long you held it. Leave at 0 for the plain ROI; enter the years to see the annualised return (CAGR) as well.

ROI formula

ROI = (final value − cost) ÷ cost × 100 · multiple = final value ÷ cost · annualised = (final value ÷ cost)^(1 ÷ years) − 1

\text{ROI} = \frac{V_{\text{final}} - C}{C} \times 100 \qquad r_{\text{annual}} = \left(\frac{V_{\text{final}}}{C}\right)^{1/n} - 1

Return on investment is the gain as a fraction of what was put in: subtract the cost from what came back, divide by the cost, and express it as a percentage. Putting in {{$10000}} and getting {{$15000}} back is a {{$5000}} gain, which is 50% of the cost — a 1.5× multiple. ROI on its own says nothing about time, and that is its trap: 50% over one year and 50% over ten are the same ROI and very different investments. Give the page the years held and it also reports the annualised rate — the compound rate that would turn the cost into the final value over that time, which is the same figure the CAGR calculator gives and the one to compare against a savings rate or an index. Enter the final value after fees and taxes if you want the after-cost return.

ROI worked example

An investment costing $10,000 that is worth $15,000 three years later: the gain is $15,000 − $10,000 = $5,000, and $5,000 ÷ $10,000 = 0.5, so the ROI is 50% and the multiple 1.5×. Spread over three years that is (1.5)^(1⁄3) − 1 = 14.47% a year — not 50 ÷ 3 = 16.67%, because the gains compound. Had the same result taken ten years, the ROI would still be 50% but the annualised rate only 4.14%.

More ROI examples

A $2,000 marketing campaign that brought in $2,600 of gross profit: ($2,600 − $2,000) ÷ $2,000 = an ROI of 30.00%.

A home bought for $250,000, all costs included, and sold seven years later for $340,000: an ROI of 36.00% — but only 4.49% a year once spread over the seven years.

Where the ROI calculator can give the wrong answer

ROI ignores time. Always look at the annualised line, or the CAGR page, before comparing two investments held for different periods.
Cost is everything you put in, including fees, and final value is what you actually got out, after selling costs and tax, if you want a real answer. Entering the sticker price and the gross sale price overstates the return.
Money added or withdrawn along the way breaks the simple formula. A portfolio you topped up needs a money-weighted return (XIRR), not ROI.
A negative ROI means a loss, and −100% means everything was lost. The page reports the net loss on its own line and the annualised rate only when the final value is above zero.
Percentages of small costs mislead: a {{$100}} investment that doubles is a 100% ROI and {{$100}} of gain; a {{$1000000}} investment with a 5% ROI is {{$50000}}. Compare the money as well as the rate.

Spotted a mistake? Tell us

ROI FAQ

: Subtract what you paid from what you got back, divide by what you paid, and multiply by 100. Paid {{$2000}}, got {{$2600}}: ({{$2600}} − {{$2000}}) ÷ {{$2000}} × 100 = 30%. Enter cost and final value above and the page shows the working, the gain and the multiple.
: It depends on the time taken and the risk. A 50% ROI over one year is exceptional; over fifteen years it is under 3% a year, less than a savings account. Compare the annualised rate against what a low-risk alternative paid over the same period, not the headline percentage.
: ROI is the total return over the whole holding period, with no time in it. CAGR is the annual compound rate that produces that total over the years held. A 100% ROI over 5 years is a 14.87% CAGR; over 10 years, 7.18%. The page gives both when you enter the years.
: The same way: gain attributable to the spend, minus the spend, divided by the spend. A campaign costing {{$5000}} that brought {{$8000}} of profit has an ROI of ({{$8000}} − {{$5000}}) ÷ {{$5000}} = 60%. Managerial accounting texts define a division's ROI as operating income ÷ assets invested — the same ratio at a larger scale.
: No. ROI divides the gain by what was invested; margin divides profit by revenue. A shop can earn a 20% margin on each sale and a 60% ROI on its capital if that capital turns over three times a year.