ROI Calculator
Return on investment, with the annualised rate beside it, because 30 percent in nine months and 30 percent in five years are not the same result.
Invested $5,000.00
Returned $6,500.00
Gain $1,500.00
ROI 30%
Period 9 months
Annualised 41.9%
30% over 9 months is 41.9% a year compounded. That is the figure to
compare against anything else you could have done with the money.
The annualised rate compounds rather than dividing: a 30 percent return
over five years is about 5.4 percent a year, not 6.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
Return on investment is the gain divided by what went in. That is easy. The part that gets left out is the time, and without it the number cannot be compared to anything: 30 percent in nine months is a very good year, and 30 percent over five years is worse than a savings account.
So this reports both, and the annualised figure compounds rather than dividing.
How to use
- Put in everything that went in, including the time you paid for.
- Put in the total that came back, not the profit.
- Put in how long it took, in months.
Example
Five thousand invested, six and a half thousand back, nine months:
Invested $5,000.00
Returned $6,500.00
Gain $1,500.00
ROI 30%
Period 9 months
Annualised 41.9%Thirty percent in nine months annualises to 41.9, because the same rate repeating compounds. Over five years the same 30 percent annualises to 5.4 percent, not 6: dividing the return by the years is the common shortcut and it overstates everything longer than a year.
Pitfalls
Count the time you paid for. A campaign that “cost 2,000” and took three weeks of someone’s attention cost more than 2,000. If the time is free, the comparison against other things you could have done with it is not honest.
Returned is the total, not the profit. Six and a half thousand back on five thousand in is a 30 percent return. Putting 1,500 in the returned field reports a 70 percent loss.
ROI is silent about risk and about scale. A 300 percent return on 50 is 150 of profit. Rank by the money, then check the rate.
Annualising a short period exaggerates. A 10 percent return in one month annualises to 214 percent, which is arithmetically true and not a forecast. Treat anything under a quarter as a rate you cannot repeat on demand.
Marketing ROI usually means ROAS. Return on ad spend divides revenue by spend and ignores the cost of goods, so it reads much higher. Keep them apart, and know which one the person asking means.
Compatibility
Arithmetic in the browser: nothing is uploaded, nothing is stored. The share link carries the figures.
The annualised rate is the compound annual growth rate: the ratio of returned to invested, raised to the power of one over the years, minus one. It is undefined for a total loss and for a period of zero, and the tool says so rather than printing a number.