Finance & Investment Tools

ROI Calculator

Calculate Return on Investment (ROI %), net profit, annualised ROI, payback period, break-even point, and CAGR — for stocks, real estate, marketing campaigns, and business projects. Full step-by-step working with industry benchmarks.

5 Calculation Modes
Step-by-Step Working
Annualised ROI / CAGR
Industry Benchmarks
100% Free

ROI Calculator

Enter your investment details — get ROI %, net profit, payback period, annualised return & projection table

$
$
Formula: ROI % = ((Return − Cost) ÷ Cost) × 100. Enter the total cost of your investment and the final value (or total amount received back). Both should include all fees and additional costs.
$10K → $13,500 (35%)
$5K → $6K (20%)
$50K → $80K (60%)
$1K → $950 (loss)
Break-even
💰 ROI RESULT
—
—
—
Summary Metrics
Step-by-Step Calculation
Context, Benchmarks & Interpretation
Key Metrics at a Glance
Full Calculation Details
    Share Result

    Complete ROI Formula Guide — Every Formula Explained with Examples

    All ROI formulas used in finance, marketing, real estate and business — with worked examples

    MetricFormulaExampleUse Case
    Basic ROI((Return − Cost) ÷ Cost) × 100($13,500 − $10,000) ÷ $10,000 × 100 = 35%Any investment
    Net ProfitReturn − Initial Investment$13,500 − $10,000 = $3,500Absolute gain
    Annualised ROI / CAGR((End ÷ Start)^(1÷years) − 1) × 100($18K ÷ $10K)^(1/5) − 1 = 12.47%/yrMulti-year comparison
    Rule of 7272 ÷ Annual ROI %72 ÷ 8% = 9 years to doubleQuick doubling estimate
    Marketing ROI((Revenue − COGS − Spend) ÷ Spend) × 100($25K − $10K − $5K) ÷ $5K × 100 = 200%Campaign performance
    ROASRevenue ÷ Ad Spend$25,000 ÷ $5,000 = 5× ROASAd efficiency
    Cap Rate (Real Estate)(Net Operating Income ÷ Property Value) × 100($13,000 ÷ $300,000) × 100 = 4.33%Property income yield
    Cash-on-Cash Return(Annual Pre-Tax Cash Flow ÷ Total Cash Invested) × 100($13,000 ÷ $60,000) × 100 = 21.7%Real estate leverage
    Payback PeriodInvestment ÷ Annual Net Cash Flow$50,000 ÷ $12,500 = 4 yearsRisk & liquidity
    Break-Even RevenueFixed Costs ÷ Contribution Margin %$5,000 ÷ 0.40 = $12,500Business viability
    ROI RatioReturn ÷ Cost$13,500 ÷ $10,000 = 1.35×Return multiple
    📌 Key distinction: ROI ignores the time value of money. For long-term comparisons, always use Annualised ROI (CAGR) or NPV. A 100% ROI over 10 years (7.18% CAGR) is very different from 100% over 1 year.

    What Is ROI? Return on Investment Fully Explained — Formulas, Types & Limitations

    Everything you need to understand, calculate, and apply ROI correctly in any context

    The Core Concept
    ROI = What You Got Back ÷ What You Put In

    Return on Investment (ROI) is one of the most widely used performance metrics in finance and business. At its simplest, it measures how much you earned relative to how much you spent. The formula is ROI % = ((Net Profit ÷ Cost of Investment) × 100), where Net Profit = Final Value − Initial Investment.

    ROI is popular because it is dimensionless — a single percentage that can be compared across wildly different types of investments, from stocks and real estate to marketing campaigns and capital equipment. Its simplicity is both its greatest strength and its key weakness.

    ⚠️ ROI's biggest limitation: it ignores time. A 50% ROI sounds great — but is it over 1 year or 10 years? Always convert to annualised ROI (CAGR) to make meaningful comparisons across different investment durations.
    📊
    ROI vs CAGR vs IRR
    ROI measures total return regardless of time. CAGR (Compound Annual Growth Rate) = annualised ROI assuming compounding. IRR (Internal Rate of Return) is the discount rate that makes NPV = 0 — used for complex multi-period cash flows. For simple investments with one entry and exit point, CAGR is sufficient and more practical.
    💡
    The Rule of 72
    To estimate how long it takes to double your money, divide 72 by the annual ROI %. At 6% per year: 72 ÷ 6 = 12 years. At 10%: 72 ÷ 10 = 7.2 years. At 18%: 72 ÷ 18 = 4 years. This mental shortcut works because of how compound growth behaves. It's accurate within about 1% for rates between 4% and 36%.
    🏦
    Opportunity Cost
    Every investment should be compared to the best alternative use of those funds. If a risk-free savings account pays 5%, any investment carrying risk should target significantly higher — often 3–5× more to compensate. A 7% ROI from a risky business venture may not justify the risk when safe bonds yield 4–5%. Always factor in opportunity cost.
    🔥
    Inflation Adjustment
    A 6% ROI in a 3% inflation environment delivers only ~3% real return. The real ROI formula: Real ROI = ((1 + Nominal ROI) ÷ (1 + Inflation Rate) − 1) × 100. The S&P 500 averages ~10% nominal return, but only ~7% real after inflation. Always compare investments on a real (inflation-adjusted) basis for long-term planning.

    ROI Benchmarks by Industry & Asset Class — What Is a Good ROI?

    Historical average returns across major investment types — so you know how your ROI compares

    Asset / ActivityTypical Annual ROIRisk LevelTime HorizonNotes
    Marketing Channel Benchmarks
    ChannelAvg ROIROASBest ForKey Metric

    8 Real-World ROI Examples — Stocks, Property, Business & Marketing

    Fully worked ROI calculations for common real-world scenarios

    📈
    Example 1 — Stock Market Investment

    Buy $10,000 of S&P 500 index fund. After 7 years, value grows to $19,487 (historical 10%/yr CAGR). Total ROI = (19,487 − 10,000) ÷ 10,000 × 100 = 94.87%. Annualised CAGR = (1.9487)^(1/7) − 1 = 10% per year. This is the long-run US stock market benchmark.

    🏠
    Example 2 — Buy-to-Let Property

    Buy property for $300,000. After 5 years sell for $380,000. Collected $18,000/yr rent, paid $5,000/yr expenses. Total rental profit: 5 × $13,000 = $65,000. Capital gain: $80,000. Total profit: $145,000. Total ROI = 145,000 ÷ 300,000 × 100 = 48.3%. Annualised = 8.2% / yr.

    📣
    Example 3 — PPC Advertising Campaign

    Spend $5,000 on Google Ads. Generate $28,000 revenue with $11,000 COGS. Marketing profit = $28,000 − $11,000 − $5,000 = $12,000. Marketing ROI = $12,000 ÷ $5,000 × 100 = 240%. ROAS = $28,000 ÷ $5,000 = 5.6×. This is considered an excellent result — industry average PPC ROAS is 2–3×.

    ☕
    Example 4 — Small Business Launch

    Invest $50,000 to open a café. Annual net cash flow of $15,000. Payback Period = $50,000 ÷ $15,000 = 3.33 years. By year 5 with $75,000 total income: ROI = ($75,000 − $50,000) ÷ $50,000 × 100 = 50%. Annualised = 8.45%/yr. Typical small business target is under 3-year payback.

    💻
    Example 5 — Software/SaaS Acquisition

    Buy a SaaS product for $120,000. Earns $3,000/month recurring revenue with low overhead. Annual cash flow = $36,000 − $5,000 costs = $31,000. Year 1 ROI = $31,000 ÷ $120,000 × 100 = 25.8%. Payback period = $120,000 ÷ $31,000 = 3.87 years. Common SaaS acquisition multiple is 3–4× annual revenue.

    📧
    Example 6 — Email Marketing

    Invest $1,200/yr in email platform + $800 in content creation = $2,000 total spend. Generate $18,000 revenue from email with $7,000 COGS. Net profit = $18,000 − $7,000 − $2,000 = $9,000. Email ROI = $9,000 ÷ $2,000 × 100 = 450%. Email marketing consistently delivers the highest ROI of any digital channel — industry average is 3,600% (36× return).

    🏋️
    Example 7 — Employee Training Investment

    Company spends $5,000 per employee on sales training. Average salesperson revenue increases by $18,000/yr post-training. Net gain = $18,000 − $5,000 = $13,000. Training ROI = $13,000 ÷ $5,000 × 100 = 260%. Research shows workforce training ROI typically ranges from 150% to 400%. HR investments are often undervalued.

    ⚡
    Example 8 — Solar Panel Installation

    Install solar panels for $15,000. Annual electricity savings = $1,800. Government rebate = $3,000. Net cost = $12,000. Payback period = $12,000 ÷ $1,800 = 6.67 years. Over 25-year panel lifespan: total savings = $45,000. ROI = ($45,000 − $12,000) ÷ $12,000 × 100 = 275%. Annualised = 4.5%/yr — often beating a savings account.

    How to Use This ROI Calculator — All 5 Modes Explained

    Step-by-step guide to every calculation mode with tips on interpreting results

    • 1
      Basic ROI Mode — Any Investment or Purchase

      Enter the initial cost and final value of any investment. The calculator computes ROI %, net profit, cost-to-return ratio, and the Rule of 72 estimate. Use this for stocks, bonds, collectibles, business sales, equipment purchases, or any scenario where you have a single entry and exit cost. The result section includes a year-by-year projection at the implied growth rate and an ROI performance gauge rating your result against common benchmarks.

    • 2
      Annualised ROI Mode — Multi-Year Investments (CAGR)

      Enter initial investment, final value, and holding period in years. The calculator computes CAGR (Compound Annual Growth Rate), which is the most important metric for comparing investments held over different time periods. A 100% total ROI looks identical whether it took 3 years or 15 years — CAGR reveals the truth. Outputs include total ROI %, annualised %, Rule of 72 doubling time, and a full year-by-year compounding table showing how your investment grew each year.

    • 3
      Marketing ROI Mode — Campaign Performance Analysis

      Enter marketing spend, revenue generated, and COGS (cost of goods sold). The calculator computes marketing ROI %, ROAS (Return on Ad Spend), gross profit, and profit ratio. Also select your marketing channel to see how your result compares against industry benchmarks for email, PPC, social media, content, and SEO. A key output is the "profit per dollar spent" metric — how much gross profit you earn for every dollar invested in marketing.

    • 4
      Real Estate ROI Mode — Rental Property Analysis

      Enter purchase price, current/sale value, annual rental income, annual expenses, and holding period. The calculator computes cap rate, cash-on-cash return, total ROI, annualised ROI, and a year-by-year income table. Cap rate (NOI ÷ Property Value) measures the unlevered income yield. Cash-on-cash return is particularly important for leveraged properties. All outputs assume no mortgage — for leveraged calculations, use your equity as the investment base.

    • 5
      Payback Period Mode — Project & Business Break-Even

      Enter initial investment and annual net cash flow to calculate the payback period (how many years to recover your investment). Optionally enter fixed costs and contribution margin percentage to calculate the revenue break-even point. The payback period is a critical risk metric — the shorter it is, the faster you recover capital and reduce risk. A year-by-year cumulative cash flow table shows the exact year you break even and your cumulative profit thereafter.

    ROI Calculator — Frequently Asked Questions

    Expert answers to the most commonly asked ROI questions

    How do I calculate ROI correctly?
    The ROI formula is: ROI % = ((Net Profit ÷ Cost of Investment) × 100), where Net Profit = Final Value − Initial Investment. Always include ALL costs — purchase price, transaction fees, taxes, and ongoing expenses — not just the headline investment figure. For stocks, include brokerage commissions. For property, include stamp duty, legal fees, and renovation costs. Missing costs makes ROI appear higher than reality. Also specify the time period alongside the ROI figure — 35% ROI means very different things over 1 year vs 10 years.
    What is a good ROI for different types of investment?
    Benchmarks vary widely by asset class and risk level. Savings account: 4–5% (2024). Government bonds: 4–6%. S&P 500 index: ~10% historically (7% real). Real estate: 8–12% total return. Private equity: 15–25%. Venture capital: 20–30%+ targets. Marketing (email): 3,600% average. Marketing (PPC): 200–400% typical. The key question is always: is this ROI proportionate to the risk taken? Higher returns should come with higher risk. If someone offers 30%+ with "guaranteed" safety, be very sceptical.
    What is the difference between ROI and CAGR?
    ROI measures total return ignoring time: ROI = (Profit ÷ Cost) × 100. CAGR (Compound Annual Growth Rate) is the annualised ROI assuming compounding: CAGR = ((End ÷ Start)^(1÷years) − 1) × 100. Example: $10,000 growing to $20,000 over 10 years has ROI = 100% but CAGR = 7.18%. The same $10K → $20K over 3 years has ROI = 100% but CAGR = 26%. CAGR is almost always the better metric for comparing investments — it's the standard used by mutual funds, ETFs, and financial advisers to report performance.
    How do I calculate marketing ROI properly?
    The correct marketing ROI formula subtracts COGS from revenue: Marketing ROI = ((Revenue − COGS − Marketing Spend) ÷ Marketing Spend) × 100. A simpler but incomplete version just uses gross revenue, which overstates performance. ROAS (Return on Ad Spend) = Revenue ÷ Ad Spend — note this is a ratio, not a percentage. A ROAS of 4× means $4 revenue per $1 spent. To be profitable, ROAS must exceed 1÷Gross Margin %. If margin is 30%, you need ROAS of at least 3.33× to break even on marketing. Industry benchmark: 5× ROAS (400% ROI) is considered excellent.
    What is the payback period and why does it matter?
    The payback period is how long it takes to recover your initial investment from net cash flows: Payback = Investment ÷ Annual Net Cash Flow. It matters because it measures risk and liquidity — a shorter payback means your capital is at risk for less time and you regain flexibility sooner. Most SMBs target 1–3 year payback for capital investments. Large infrastructure projects may accept 10+ years. Limitations: it ignores returns after the payback point and doesn't account for the time value of money. Use it alongside ROI and NPV for a complete picture.
    How do I calculate real estate ROI?
    Real estate ROI combines two income streams: rental income and capital appreciation. Total ROI = ((Total Rental Profit + Capital Gain) ÷ Purchase Price) × 100. Where: Total Rental Profit = (Annual Rent − Annual Expenses) × Years held. Capital Gain = Sale Price − Purchase Price. The cap rate = (Annual Net Operating Income ÷ Property Value) × 100 — this measures the property's income yield independent of financing. Cash-on-cash return measures the cash income relative to your actual cash invested (important for leveraged properties). Always include all costs: stamp duty, legal fees, repairs, insurance, property management, and vacancy allowance.
    What is the difference between ROI and NPV?
    ROI is a simple ratio that ignores the time value of money. NPV (Net Present Value) discounts all future cash flows back to today's money using a required rate of return (discount rate). A positive NPV means the investment creates value above your minimum threshold. When to use ROI: quick comparison of simple investments with a single outflow and inflow. When to use NPV: projects with multiple years of uneven cash flows, when comparing projects of different sizes, or when the timing of returns matters significantly. For business capital budgeting, NPV is almost always superior to ROI alone.
    Does ROI account for inflation?
    Standard ROI does NOT account for inflation — it measures nominal return. To calculate real ROI: Real ROI = ((1 + Nominal ROI) ÷ (1 + Inflation Rate) − 1) × 100. If your investment returns 8% and inflation is 3%, your real ROI is approximately 4.85% (not 5% — compounding matters). Over long periods, inflation erosion is significant. The S&P 500's ~10% historical nominal return becomes ~7% real after ~3% inflation. Always quote and compare ROI figures on the same basis (nominal or real) to avoid misleading comparisons.
    Quick ROI Calculator
    —
    ROI %
    Rule of 72 — Doubling Time
    —
    years to double
    ROI Rating Scale
    Related Tools