ROI Calculator
Return on investment (ROI) is the single most common way to judge whether money you committed actually did its job. It expresses your gain as a percentage of what you put in, so a £300 profit on £1,000 and a £3,000 profit on £10,000 can be compared directly — both are a 30% return. That makes ROI a fast, universal sanity check for everything from a marketing campaign to a piece of equipment to a stake in a project.
Plain ROI has one blind spot: it ignores time. Earning 30% in twelve months is very different from earning 30% over three years, yet the headline figure is identical. That is why this calculator also reports annualised ROI — the equivalent yearly rate, found by compounding the total return over the holding period. Annualised ROI is what lets you fairly compare a quick six-month win against a slow multi-year hold, or rank several opportunities that each ran for a different length of time. Enter your initial outlay, the total amount you got back, and how many months your money was tied up; the annualisation formula is written out below with a worked example.
How this calculator works
Three figures are derived from your inputs:
Net profit = total amount returned − initial investment. The amount returned is the full value you received back, including the return of your original capital, so net profit is the true gain (or loss).
ROI = net profit ÷ initial investment × 100. This is the headline return over the entire holding period, regardless of how long that was. If the initial investment is zero or less, ROI is undefined (you cannot divide by it) and the calculator says so instead of returning a meaningless figure.
Annualised ROI = ((amount returned ÷ initial investment) ^ (12 ÷ holding period in months) − 1) × 100. This compounds the total multiple into a per-year rate. When the holding period is exactly 12 months it equals plain ROI; for longer periods it is lower, and for shorter periods it is higher, because the same total gain is spread over a different amount of time. It is only shown when the investment, the return and the period are all positive.
Worked example
Suppose you invest £1,000 in a campaign and receive £1,300 back after 24 months. Net profit = £1,300 − £1,000 = £300. ROI = £300 ÷ £1,000 × 100 = 30% over the whole two years. To annualise: (1,300 ÷ 1,000) ^ (12 ÷ 24) − 1 = 1.3 ^ 0.5 − 1 = 0.1402, i.e. an annualised ROI of about 14.02% per year. Notice the headline 30% looks strong, but spread over two years it is only ~14% a year — exactly the comparison annualising is designed to surface. Had the same £300 been earned in 12 months, both figures would read 30%.
Assumptions & limits
- This is general business guidance, not investment, financial or tax advice. It ignores tax, fees and risk — two investments with the same ROI can carry very different risk.
- The amount returned must be the total value received back including your original capital, not just the profit, or ROI will be overstated.
- Annualised ROI assumes a single lump-sum in and a single lump-sum out, with no interim cash flows; for staged or recurring contributions a cash-flow (IRR) approach is more accurate.