An ROI calculator measures return on investment: the gain or loss as a percentage of what you put in. ROI = (final value − initial cost) ÷ initial cost × 100. For example, $10,000 that grows to $15,000 is a $5,000 gain and a 50% ROI.
On this page
How to use the ROI calculator
- Enter the initial cost, including fees.
- Enter the final value, including income received.
- Read the ROI percentage and the gain or loss.
The ROI calculator needs an initial cost above zero; with a zero cost, ROI is undefined and the result shows 0%.
What is the ROI formula?
ROI = (final value − initial cost) ÷ initial cost × 100
Gain = final value − initial cost. A positive ROI means you made money; a negative ROI means a loss. The SEC’s Investor.gov describes ROI the same way: the gain or loss relative to the amount invested.
ROI calculator worked example
- Initial cost $10,000, final value $15,000
- Gain = 15,000 − 10,000 = $5,000
- ROI = 5,000 ÷ 10,000 × 100 = 50%
A loss works the same way: $10,000 that falls to $6,000 is a −40% ROI.
ROI table for a $10,000 investment
| Final value | Gain or loss | ROI |
|---|---|---|
| $5,000 | $-5,000 | -50% |
| $8,000 | $-2,000 | -20% |
| $10,000 | $0 | 0% |
| $12,000 | $2,000 | 20% |
| $15,000 | $5,000 | 50% |
| $20,000 | $10,000 | 100% |
| $30,000 | $20,000 | 200% |
Annualized ROI
Simple ROI ignores time: 50% in one year and 50% over ten years look the same. To compare investments held for different periods, annualize it: annual return = (final ÷ initial)1 ÷ years − 1.
| Years held | 50% total ROI per year | 100% total ROI per year |
|---|---|---|
| 1 | 50.00% | 100.00% |
| 2 | 22.47% | 41.42% |
| 3 | 14.47% | 25.99% |
| 5 | 8.45% | 14.87% |
| 10 | 4.14% | 7.18% |
This ROI calculator does not annualize; use the average return calculator or the IRR calculator when cash flows happen at several dates.
What to include in cost and value
- Costs: purchase price plus fees, commissions and other money you spent to make the investment.
- Value: sale proceeds or current value, plus income received such as dividends or rent, minus selling costs.
- Taxes: ROI is usually shown before tax; after-tax ROI can be much lower.
- Extra money added: if you invested more along the way, the simple formula overstates the return.
For business projects, the same formula compares profit with spending: a $1,000 campaign that produces $3,000 of gross profit has an ROI of (3,000 − 1,000) ÷ 1,000 = 200%. Be clear whether you mean revenue or profit, because using revenue inflates ROI.
ROI vs profit margin
ROI divides the gain by the amount invested. Profit margin divides profit by revenue. A product bought for $60 and sold for $100 has a 66.7% ROI on cost but a 40% margin on the sale price. Use the profit margin calculator for pricing. Markup is a third measure: profit divided by cost, which for a single sale equals the ROI on that item, so a 66.7% markup and a 66.7% ROI describe the same $60-to-$100 trade.
Estimates for education only, not financial advice. Your lender’s figures are final.
Comparing investments of different lengths
Plain ROI ignores time, which can make a slow investment look better than a quick one. Suppose one project turns $10,000 into $13,000 over three years, and another turns $10,000 into $12,000 in one year. The ROI calculator gives 30% for the first and 20% for the second.
Annualized, the picture flips. The first works out to about 9.1% a year, because 1.3 to the power of one third is 1.091. The second earned 20% in a single year. If you could reinvest the second project’s money at a similar rate, it was the better use of capital.
Two habits make an ROI calculator more honest:
- Count every cost. For a rental, include closing costs, repairs, vacancy and management, not just the purchase price. For marketing, include staff time and software, not just ad spend.
- Use the same period for every option you compare, or compare annualized figures.
ROI also says nothing about risk. A 15% expected return on a speculative venture is not equivalent to 15% on a bond, so read the ROI calculator result alongside how likely you are to actually get it.
Related converters and calculators
Related tools:
- Average return calculator: annualized returns
- IRR calculator: multiple cash flows
- Profit margin calculator: margin on sales
- Investment calculator: growth with deposits
- Compound interest calculator: lump sums
For a resale project, the fix and flip calculator adds purchase, rehab and holding costs.
Sources
Investor.gov (SEC): Return on investment (ROI); Investor.gov (SEC): Compound interest calculator.
Questions about this calculator
How do I calculate ROI?
ROI = (final value − initial cost) ÷ initial cost × 100.
What is a good ROI?
It depends on the risk and the time held. Compare annualized returns for investments held for different periods.
Can ROI be negative?
Yes. A loss gives a negative ROI: $10,000 falling to $6,000 is −40%.
Is ROI annualized?
No. Simple ROI ignores time. Annual return = (final ÷ initial)^(1 ÷ years) − 1.
What is the difference between ROI and profit margin?
ROI divides gain by the amount invested; margin divides profit by revenue.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
Report a calculation issue