ROI Calculator

Is This Investment Worth It? Calculate Your ROI Before You Commit

Every business decision is an investment. Money spent on marketing, equipment, hiring, or product development all have an expected return. ROI — return on investment — is how you measure whether that return justifies the cost.

This ROI calculator gives you your simple ROI percentage and, if you enter a time period, your annualised return — so you can compare investments held for different lengths of time on equal footing.

Real Example: Calculating ROI on a Marketing Campaign

For every $1 spent on the campaign, $3.60 came back. That’s an ROI of 260% — calculated as ($13,000 net return ÷ $5,000 investment) × 100. A strong result. Marketing ROI above 5:1 (500%) is generally considered excellent; anything positive is better than not running the campaign.

The ROI Formula — How to Calculate Return on Investment

Simple ROI vs Annualised ROI

Simple ROI tells you the total return regardless of how long you held the investment. Annualised ROI converts that to a per-year figure — essential when comparing a 50% return over 5 years with a 50% return over 1 year (very different outcomes).

What Is a Good ROI?

• Stock market investments: The S&P 500 has averaged ~10% annually before inflation historically. Anything above this on a risk-adjusted basis is genuinely good.
• Business projects: Most companies set internal hurdle rates of 15–30%+ ROI for capital projects. Anything positive with acceptable risk is worth considering.
• Marketing: A 5:1 return (500% ROI) is a strong benchmark. Below 2:1 the campaign may be eating too much margin.
• Real estate: 8–12% annual return (including rental income and appreciation) is typical in mature markets.

ROI Calculator Examples

• Stock investment: Buy $10,000 of shares, they’re worth $13,500 after 2 years. ROI = 35%, Annualised = 16.2%.
• Rental property: Purchase $300,000 property, receive $25,000 net rent over a year and sell for $330,000. ROI = 18.3%.
• Training course: Pay $2,000 for a certification, resulting in a $10,000 salary increase. ROI = 400% in year one alone.
• Equipment purchase: Buy $50,000 machine, it generates $15,000 extra profit per year. Payback in 3.3 years, ROI = 30%/yr.

✍️ Reviewed by the NerdyTools Finance Team — Last updated August 2026

ROI Results Need a Consistent Definition of Return

Return on investment is sensitive to which costs and benefits you include. Use the same time period and include acquisition cost, operating expenses, fees, taxes, and other capital where relevant; otherwise the percentage can look better than the real outcome. A simple ROI compares net gain with the original investment, while annualised return accounts for how long the money was invested. This calculator is useful for comparing scenarios, but it does not model cash-flow timing, inflation, risk, or probability of success. Treat the output as a decision aid and check the assumptions before committing funds.

Frequently Asked Questions