ROI Calculator

A good ROI depends on the type of investment and the associated risk. For marketing campaigns, an ROI of 5:1 (or 400%) is generally considered strong, while 2:1 is the minimum most businesses consider acceptable. For capital investments, anything above your cost of capital is technically positive. In practice, most businesses aim for at least 15 to 25 percent annual ROI on major investments. The key is comparing your ROI to alternatives and to your industry benchmarks rather than evaluating it in isolation.

ROI measures the total return as a percentage of your investment without accounting for time. A 50 percent ROI over one year is very different from 50 percent over five years. Annualized ROI normalizes returns to a yearly basis so you can compare investments with different time horizons. Our calculator shows both figures so you can make fair comparisons between a short-term marketing campaign and a longer-term equipment purchase.

Yes, including all relevant costs gives you a more accurate picture. Beyond the direct purchase price, consider implementation costs, training time, maintenance fees, opportunity costs, and any ongoing subscriptions. Understating costs is the most common reason ROI projections end up being misleading. It is better to overestimate costs slightly and be pleasantly surprised than to approve a project based on incomplete cost data.

For marketing campaigns, your investment is the total campaign spend including ad budget, creative production, and labor. Your return is the revenue directly attributable to that campaign minus the cost of goods sold. If a campaign costs 5,000 dollars and generates 20,000 dollars in revenue with 8,000 dollars in product costs, your net gain is 7,000 dollars. ROI would be 7,000 divided by 5,000, which equals 140 percent. Track attribution carefully because overestimating marketing-driven revenue is common.