ROI (Return on Investment) Calculator
Work out the return on any investment, project or campaign, and the annualised rate so you can compare options of different lengths.
- Free, no sign-up
- Runs in your browser, nothing is stored
- Formula and worked example included
ROI Calculator
Enter your figures to see results.
What is ROI, in plain terms?
Return on investment is how much you got back for every pound you put in, as a percentage. Spend £10,000 and get £12,500 back and your ROI is 25%. It is the quickest way to tell whether a purchase, project or campaign paid for itself, and to compare two very different spends on the same footing.
How to use this calculator
- Enter everything the investment cost you, including set-up, fees and any staff time you want to count.
- Enter the total cash that came back (sales, savings and any resale value), not just the profit.
- Add how long the money was tied up to get an annualised rate you can compare with a savings rate or another project.
What your result means
How to read the figure, what counts as normal, and what to do about it.
What return on investment tells you
Return on investment is the simplest test of whether money was well spent: how much came back for every pound that went in. It works for anything with a cost and a measurable pay-off: a new van, a Google Ads campaign, a piece of software, a training course, a refit. Because it is a percentage, you can compare a £2,000 marketing test with a £200,000 machine on the same footing.
ROI does not care how long the money was tied up, which is its main weakness. A 20% return over six months is far better than 20% over five years. That is why this calculator also gives an annualised figure when you enter the time held.
Getting the inputs right
Most ROI mistakes are input mistakes rather than maths mistakes.
- Count the full cost. A £15,000 machine that needs £3,000 of installation, £1,000 of training and £500 a year of maintenance did not cost £15,000.
- Use cash returned, not profit. If you invested £10,000 and made £2,000 profit, the amount returned is £12,000. Entering £2,000 would show a 80% loss.
- Attribute returns honestly. If sales rose 10% during a campaign but 6% was seasonal, only the 4% belongs to the campaign.
- Include residual value. A vehicle sold after three years for £8,000 returned that £8,000 on top of the income it generated.
What counts as a good ROI?
It depends on the risk and what else you could do with the money. Rough UK reference points:
| Use of money | Typical annual return |
|---|---|
| Business savings account | 3–5% |
| Paying down a business loan | The loan's interest rate, risk-free |
| Equipment that cuts labour or waste | 15–40% |
| Paid marketing (mature account) | 100–400% on ad spend, before other costs |
| New product or market launch | Often negative in year one |
A project should clear the return you could get without effort or risk by a margin that reflects how likely it is to go wrong.
Worked example: a café espresso machine
A café spends £12,000 on a new espresso machine, including fitting. Over three years it sells more coffee and wastes less milk, adding £5,600 a year in gross profit. At the end it sells the old machine for £600.
Amount returned = 3 × £5,600 + £600 = £17,400.
ROI = (17,400 − 12,000) ÷ 12,000 × 100 = 45% over three years.
Annualised = (17,400 ÷ 12,000)^(1 ÷ 3) − 1 = 13.2% a year, comfortably above what the £12,000 would have earned in the bank, but the owner should still ask whether the £5,600 uplift is really attributable to the machine.
Frequently asked questions
Is ROI the same as profit margin?
No. Profit margin measures profit as a share of sales revenue; ROI measures gain as a share of the money invested. A shop can run a 5% margin on sales but a 40% ROI on the capital tied up in it.
Can ROI be negative?
Yes. If the amount returned is less than the amount invested, ROI is negative and shows the percentage lost. Minus 100% means the whole investment was lost.
How is ROI different from ROAS?
Return on ad spend divides revenue by ad cost and ignores the cost of what you sold and everything else. A 400% ROAS on a 25% margin product is roughly break-even once cost of goods is included. ROI should use profit or total cash returned, so it is the more honest figure.
Should I use ROI or payback period?
Both. ROI tells you how much you make; payback tells you how quickly the cash comes back, which matters more when cash is tight. A 60% ROI that takes six years to arrive may be worse for a small business than 25% that pays back in a year.
What about opportunity cost?
Compare the annualised return with the best safe alternative: repaying debt, a savings rate, or another project. If the ROI does not beat that by enough to cover the extra risk, the money is better used elsewhere.
The maths behind this calculator
For anyone who wants to check the working or rebuild it in a spreadsheet.
The formula
ROI (%) = (Amount returned − Amount invested) ÷ Amount invested × 100 Annualised return (%) = ((Amount returned ÷ Amount invested) ^ (1 ÷ years) − 1) × 100
The annualised version is the compound annual growth rate: the steady yearly rate that would turn the amount invested into the amount returned over the period. It is the right number to compare against interest rates, hurdle rates or other projects.
Assumptions and limits
- ROI is a simple percentage: it ignores timing of cash flows within the period and does not discount future money. For large, multi-year projects use NPV or IRR alongside it.
- The annualised figure assumes the return accrued evenly and compounded; a project that paid everything back in the last month would show the same number.
- Inflation and tax are not included. A 5% ROI in a year of 4% inflation is a real return of about 1%.
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