ROI Calculator

How to Calculate ROI?

ROI is calculated by comparing the net gain (or loss) from an investment with its cost and the period of investment in years.

ROI (%) = [(Final Value – Initial Investment) ÷ Initial Investment] × 100 ÷ Investment Period (Years)

Where:

• Initial Investment = the amount you invested
• Final Value = the value of the investment at the end of the period
• Investment Period (Years) = how long the investment was held

This means that if you invest $1,000 and earn $1,200 back after 2 years, your ROI per year is 10%, and 20% over the entire period.

Instead of doing the math yourself, our simple ROI calculator does it instantly for you.

How to Use the ROI Calculator?

Using our online ROI calculator is quick and simple. Just enter the following values:

1. Investment Period (Years) – the duration you held the investment
2. Initial Investment – the amount you invested at the start
3. Final Value (Proceeds) – the amount you received at the end

Click Calculate, and you’ll instantly get:

• Net Profit (or Loss)
• ROI (%) over the entire period

This makes our calculator suitable for comparing both short-term and long-term investments.

Examples of Calculating ROI

Example 1

Sarah runs an online store. She spent $2,000 on a one-year marketing campaign. At the end of the year, her sales increased by $3,000.

• Initial Investment: $2,000
• Final Value: $3,000
• Net Profit: $1,000
• ROI = [($3,000 – $2,000) ÷ $2,000] × 100 ÷ 1 = 50% per year

Example 2

 John invested $100,000 in a rental property and held it for 2 years. He earned $15,000 in rent per year, with $5,000 in yearly expenses, leaving him a net profit of $10,000 per year.

• Initial Investment: $100,000
• Final Value (after 2 years of net rent): $120,000
• Net Profit: $20,000
• ROI = [($120,000 – $100,000) ÷ $100,000] × 100 ÷ 2 = 10% per year

Example 3

Emma invested $5,000 in a product launch over the course of a year, but sales only generated $4,000.

• Initial Investment: $5,000
• Final Value: $4,000
• Net Loss: –$1,000
• ROI = [($4,000 – $5,000) ÷ $5,000] × 100 ÷ 1 = –20% per year

With our calculator, Emma quickly realized her project was losing money, which helped her adjust her strategy.

Disclaimer

This online ROI calculator is provided for informational purposes only. ROI calculations may vary depending on assumptions, hidden costs, and other financial factors. Always consult with a financial advisor or accountant before making investment decisions.

FAQs

What is an ROI calculator?

An ROI calculator is a tool that helps you quickly measure the profitability of an investment by comparing the return (gain or loss) with the initial cost over a given time period.

How to calculate ROI for dummies?

Use this simple formula:

ROI (%) = [(Final Value – Initial Investment) ÷ Initial Investment] × 100 ÷ Investment Period (Years).

Example: Invest $1,000 

Get back $1,200 after 2 years

ROI per year = 10%

ROI over the entire period  = 20%

What is the average return on $500,000 investment?

It depends on the ROI rate:

Example: Investment Amount = $500,000, ROI = 10%

Annual Return = Investment Amount × Annual ROI %

Annual Return = $500,000 × 0.1 = $50,000

What is the formula for calculating ROI per year?

The formula for ROI of revenue is:

ROI (%) = [(Revenue – Costs) ÷ Costs] × 100.

What does a 24% ROI mean?

It means your investment earned a profit equal to 24% of the original cost.
Example: If you invested $10,000, a 24% ROI means you gained $2,400 (total value = $12,400).

How is ROI calculated in real estate?

ROI in real estate = (Net Profit ÷ Initial Investment) × 100.

Example: If you buy a property for $100,000 and earn $20,000 net profit over 2 years

ROI = 20% total, or 10% per year.

Can ROI be negative?

Yes, if the final value is less than the initial investment, ROI will be negative, meaning you lost money.

Example: Invest $5,000,  final value $4,000 

ROI = –20%.