ROI Calculator
Calculate return on investment, net profit, and annualized return. Enter your initial cost and final value.
The ROI formula
- ROI % = (Net Profit ÷ Cost of Investment) × 100
- Net Profit = Final Value − Cost of Investment
- Annualized ROI = ((1 + ROI/100)1/years − 1) × 100
ROI formula — worked example
You invest £5,000 in marketing. It generates £18,000 in revenue:
- Net Profit = £18,000 − £5,000 = £13,000
- ROI = (£13,000 ÷ £5,000) × 100 = 260%
For every £1 spent, you got back £2.60 in profit.
Annualized ROI — why it matters
A 100% ROI over 10 years sounds great — but annualized, that's only ~7.2% per year. A 50% ROI over 2 years = ~22.5% per year. Always use annualized ROI when comparing investments with different timeframes.
ROI benchmarks by asset class
- S&P 500 — ~10% annualized historical average
- UK property — 6–10% depending on region and period
- Marketing campaigns — 5:1 ROI (400%) is often cited as a minimum viable benchmark
- Savings accounts (UK) — currently 3.5–5% depending on the account
What is a good ROI?
It depends entirely on the context, risk level, and time horizon. A high-risk startup investment should target significantly higher ROI than a government bond. Compare ROI against alternatives — the opportunity cost matters as much as the absolute number.
Frequently asked questions
Can ROI be negative?
Yes. A negative ROI means costs exceeded returns — you lost money. For example: invest £10,000, get back £7,000 → ROI = −30%.
What is the difference between ROI and profit margin?
ROI measures the return relative to investment cost. Profit margin measures profit relative to revenue. Both are useful, but they answer different questions.
How do I calculate ROI for a marketing campaign?
(Revenue generated − Campaign cost) ÷ Campaign cost × 100. Make sure you're measuring only the revenue attributable to the campaign.