Canonical formula calculator
RETURN ON INVESTMENT
The percent gain or loss on what you put in — the foundational test for whether a decision created value or destroyed it.
Worked example
How the number is worked out
A landscaper weighing up the second-hand mini-digger they bought last year.
Starting from
Working
Thirty percent back on the money put in. ROI carries no clock — 30% over one year and 30% over four are the same figure here and completely different decisions.
What this tells you
Return on Investment measures the percent gain or loss on capital you put to work. A 30% ROI on a marketing campaign means you got back $1.30 for every dollar spent — after the spend, profit was 30%. ROI is the most universal way to compare investment options across very different categories: a $10K ad campaign at 40% ROI is comparable to a $50K equipment purchase at 35% ROI.
When to use it
Calculate ROI for any discrete investment — a marketing campaign, a piece of equipment, a hire, a software purchase. Compare across investments to find your highest-leverage capital allocations. The trap to avoid: comparing ROI without considering risk, time horizon, or scalability — a 100% ROI on a $1K test is not the same as a 100% ROI on a $100K commitment.
What it doesn’t tell you
ROI is a single-point measurement. It does not account for the time it took to realize the return, the risk involved, or the lost opportunity of capital tied up. A 50% ROI over 5 years is much weaker than a 50% ROI over 6 months. For investments with long horizons, consider annualized ROI or IRR instead.
Now put it against the rest of your numbers
You have today’s number. The Desk keeps it beside the rest of them — your margin, your price, and what it takes to hit the take-home you want. The same input always gives the same answer.