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What is return on investment (ROI)?
Return on investment, or ROI, measures how much you earned relative to what you spent. It is one of the most widely used metrics in business—applied to ad spend, hiring decisions, equipment purchases, software subscriptions, and almost any outlay where you expect a measurable return.
The ROI formula is:
For example, if you spent $1,200 on a Facebook Ads campaign and generated $3,600 in revenue, your net profit is $2,400 and your ROI is 200%—expressed as a multiple, that is 3.0x. You got back $3 for every $1 you put in.
ROI works at any scale. A freelancer evaluating a $200 course, a business owner analyzing a $15,000 equipment purchase, and a marketing team reviewing a $50,000 campaign all use the same formula to decide whether the spend was worth it.
How to use this calculator
Amount Invested. Enter the total cost of your investment—ad spend, a software subscription, a tool purchase, hiring costs, or any other business expense with a measurable return.
Amount Returned. Enter the total value you received back. For a marketing campaign, use the revenue generated. For a business investment or asset purchase, include any proceeds plus recovered costs.
Investment Period (optional). Enter the duration in days, months, or years. This unlocks annualized ROI—the return normalized to a yearly rate, so you can compare investments of different lengths fairly. A 50% ROI over three months is a very different outcome from 50% ROI over five years.
Reading your results
ROI % tells you how efficient the investment was. The investment multiple shows the same result as a ratio—200% ROI equals 3.0x, meaning you tripled your money. Annualized ROI normalizes returns to a yearly rate, which is essential when comparing opportunities of different durations.
What counts as a good ROI depends on context. Paid advertising typically targets 200–500%. The long-run S&P 500 average is roughly 10% per year. Real estate commonly returns 8–12% annually. Use the benchmarks in the sidebar to put your result in perspective—or check the badge on your result for a quick read.
If your ROI is lower than expected, your pricing or cost structure may be the issue. Use our Profit Margin Calculator to find your gross margin or work backward from a target selling price.