What is the ROI calculator?
We will explain, in a nutshell, what ROI means. And, of course, we’ll provide you with a brief manual on how to use our ROI calculator.
How to determine ROI? It stands for Return on Investment. This key metric reflects the total income amount related to some specific investment. To put it simply, ROI index shows profitability. It’s quite close to ROMI that is also available in our calculators set — yet there’s a difference. The ROMI parameter is purely related to marketing costs while ROI deals with a wide range of investments. So we have to consider every expense to calculate rate of return — employees’ salaries, office renting, promotion, raw materials, taxes, software, and services… literally everything.
Why is ROI vital for your business?
The ROI calculation is necessary for any offline and online business to detect how much money invested in a teamwork, project or ads campaign returns back. It shows the vector for your business growth.
Benchmarks of a good ROI
Just like with our marketing metrics, we cannot give a one-size-fits-all answer here. Everything depends on the specific business sphere, unique features of your brand and target audience, stage of business development, current situation in the market, and so on.
But basically we can say that:
- ROI > 100% means the project is quite profitable;
- ROI = 100% means investments returned back but didn't bring a profit. We should analyze the project and find what impedes growth;
How do you know what your ROI is?
With the Stripo rate of return calculator, you do it in two clicks.
How is ROI calculated?
The regular ROI formula is simple. Just deduct your invested amount from the returned amount, then divide this number by the invested amount, and multiply the result by 100%.
How to calculate it in practice?
Here’s an example: We’ve spent $2 500 to develop a software. Soon after release, we gained $8 000 of income. According to the rate of return formula, we need to deduct the invested amount from the returned amount: $8 000 — $2 500 = $5 500. Divide it by the expense amount: $5 500/$2 500 = 2.2. Convert it into percentage by multiplying by 100, which equals 220. Our ROI index = 220%. Not bad. Want to boost incomes even more? Here’s a tip: Save time by using our return on investment calculator. It’s better to spend time on business ideas that will bring you growth and prosperity!