ROI Calculator
ROI calculator is a valuable tool that can assist marketers in quickly and accurately calculating their Return On Investment to measure campaign profitability and effectiveness.
ROI Calculator
Calculate your Return On Investment (ROI) by entering your total investment and the amount gained to measure campaign profitability and make informed budget decisions.
Include all expenses: ad spend, labor, manufacturing, etc.
Total revenue or value generated from your investment
What Is ROI?
ROI stands for Return On Investment and measures the amount of money you earn back from an investment relative to the amount you invested. It's a crucial metric that helps answer the question: "How much profit can I earn per dollar spent on this campaign?"
A positive ROI means your campaign earned more than it cost, while a negative ROI means your campaign cost more than it earned. ROI goes beyond simple profit calculation by creating a scale of profitability that allows you to compare different campaigns and marketing activities.
ROI differs from ROAS (Return On Ad Spend) in that ROI takes into account all expenses including labor, manufacturing costs, and other overhead, while ROAS focuses specifically on advertising spend. Use ROI for long-term planning and overall business measurement, while ROAS is ideal for short-term advertising budget allocation decisions.
It's important to note that not all marketing activities should be measured based on direct ROI. Organic social media, for example, is traditionally more of a branding activity, so calculating a direct ROI for it would be inappropriate.
ROI Formula
The ROI calculation formula is:
ROI = (Amount Gained - Amount Spent) ÷ Amount Spent
Alternatively, this can be expressed as:
ROI = Net Profit ÷ Amount Spent
For example, if you spend $1,000 on a marketing campaign and generate $5,000 in revenue, your ROI would be: ($5,000 - $1,000) ÷ $1,000 = $4,000 ÷ $1,000 = 4.0 or 400%. This means you earned $4 in profit for every $1 invested.
What Is A Good ROI for Marketing?
For a marketing campaign to be considered financially successful, it must have a positive ROI (above 0%). However, this is a very low benchmark to set.
Minimum Acceptable: 100% (2:1)
This means you've doubled your investment - the minimum benchmark for an acceptable ROI.
Good Performance: 500% (5:1)
Getting back 5x your investment is considered a good goal for marketing campaigns.
Excellent Performance: 1000%+ (10:1+)
If you get 10x or more back from your investment, your marketing campaign can be considered excellent.
Keep in mind that campaigns targeting people who are already likely to convert (like retargeting) typically have higher ROIs, while cold outreach campaigns might struggle to break even initially.