How we calculate ROI
ROI compares the net gain of an initiative with the amount invested in it. It's dimensionless, which lets you compare actions of different sizes.
Use the ROI CalculatorFormula
net gain = return − investment
ROI (%) = (net gain ÷ investment) × 100
Variables
- investment
- Everything that left the cash register for the initiative, including team hours when measurable.
- return
- Gross value generated by the initiative in the period analyzed.
Step-by-step calculation
- We subtract the investment from the return to isolate the gain.
- We divide the gain by the investment.
- We convert it to a percentage; negative values indicate a loss.
Worked example
Inputs
- Investment: $2,000
- Return: $5,000
Calculation
gain = 3,000
3,000 ÷ 2,000 = 1.5
ROI of 150% — every dollar invested returned $1.50 in profit.
Common mistakes
- Using gross revenue as the return without subtracting the cost of goods sold.
- Comparing ROIs across different time horizons without annualizing.
Frequently asked questions
Does a 100% ROI mean doubling your money?
Yes: the profit equals the amount invested, so the total cash doubles.
All values are in US dollars (US$). Results are estimates and do not replace professional advice.