the guide
ROI calculator: total and annualised return on investment
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
Return on investment (ROI) measures how much you gained compared with what you put in. It helps decide whether a machine, marketing campaign, property or other investment was worth it.
Total ROI ignores time. Annualised ROI converts it into a yearly rate, so a 50% return over three years can be compared fairly with a 20% return over one year.
the formula
ROI % = (Return − Investment) ÷ Investment × 100 · Annualised = (Return ÷ Investment)^(1 ÷ Years) − 1
- · Include all costs in the investment figure.
- · Include all benefits (savings or income) in the return.
Worked example
- ₹5,00,000 invested; worth ₹7,50,000 after 3 years.
- Total ROI = 50%.
- Annualised ROI ≈ 14.47% a year.
Tips
- 1Compare projects using annualised returns.
- 2Count hidden costs such as time, maintenance and financing.
- 3Measure marketing ROI on profit, not revenue.
- 4Compare ROI with your cost of capital or loan interest rate.
Frequently asked questions
How do you calculate ROI?
ROI % = (Gain − Investment) ÷ Investment × 100.
What is annualised ROI?
The equivalent yearly rate of return, calculated like CAGR, allowing investments of different lengths to be compared.
What is a good ROI?
It depends on risk and alternatives. At minimum, ROI should beat your borrowing cost and safer options.
How do I calculate marketing ROI?
(Profit from campaign − campaign cost) ÷ campaign cost × 100, using gross profit rather than revenue.