Return on Investment (ROI)
Also known as ROI · return on investment percent
Worked example: $2,000 in, $2,500 back → 25% ROI — press Try an example to run it live, then adjust anything.
Enter your known values, leave one input blank, and solves for the missing one. Tap a variable’s symbol to see what it means, with a typical value. Try different units for next level excitement!
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UniversityApplied Field Engineering
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Return on Investment (ROI) explained
ROI puts profit and outlay on the same footing: subtract what you spent from what came back, then divide by what you spent. Two thousand dollars in and twenty-five hundred out is a 25% return. Because it is a ratio, it lets you compare a $500 tool purchase with a $50,000 vehicle on equal terms, which is precisely why it became the default language of business cases.
Its weakness is that it says nothing about time. A 25% return is superb over one year and dismal over ten, yet plain ROI reports the same number for both. Whenever two options run over different horizons, convert to an annual figure before comparing, or the shorter project will lose on paper while winning in reality. Watch the definition too: some people write ROI with the net gain on top and some with the total returned, and the two differ by exactly 1. Here is everything the investment gave back.
Return on Investment (ROI) formula
- = Return on investment
- = Total value returned ($)
- = Cost of the investment ($)
Missing one of these? Work it out first, then come back
- Total value returned — Currency Exchange Conversion, Gross Pay from an Hourly Wage
- Cost of the investment — Markup Percentage (on Cost), Gross Margin Percentage (on Price)