ROI Calculator
Enter your investment cost and net return to calculate ROI percentage, annualised return, and payback period.
Reviewed by Richard Ross · Last updated April 2026
How ROI Calculator works
ROI formula
ROI = (Net Profit ÷ Investment Cost) × 100. Net Profit = Total Return − Investment Cost. A 100% ROI means you doubled your money; a 50% ROI means you gained half of what you invested.
Annualised ROI (CAGR)
Simple ROI does not account for the time taken to generate the return. Annualised ROI — also known as Compound Annual Growth Rate (CAGR) — normalises returns across years. Formula: CAGR = (Return ÷ Cost)^(1÷Years) − 1. A 100% total ROI over 5 years is an annualised return of 14.9%.
Payback period
The payback period is the time for cumulative returns to equal the initial investment. It assumes the return is generated evenly over the investment period. A shorter payback period generally indicates lower risk.
What counts as a good ROI?
For business investments, a common benchmark is 10–15% annualised ROI. Marketing investments often target 3–5× ROI (200–400%). The right threshold depends on your cost of capital, risk, and opportunity cost of alternatives.
UK context: tax treatment of investment returns
In the UK, business investment returns are typically subject to Corporation Tax on profits (19–25% for limited companies in 2024–25). However, HMRC's Enterprise Investment Scheme (EIS) and Seed EIS (SEIS) offer significant tax reliefs for investors in qualifying UK startups: SEIS provides 50% Income Tax relief on investments up to £200,000, while EIS provides 30% relief on up to £1 million. Capital gains on EIS/SEIS investments held for 3+ years are exempt from CGT. These reliefs can materially improve the effective ROI for eligible investments.
Worked example: UK marketing campaign ROI
A UK e-commerce business spends £5,000 on a paid search campaign over 3 months. The campaign generates £18,000 in attributed revenue. Assuming a 40% gross margin, the gross profit attributable to the campaign is £7,200. After deducting the £5,000 campaign cost, net profit is £2,200. ROI = £2,200 ÷ £5,000 = 44%. Annualised over the 0.25-year campaign period, this equates to a CAGR of approximately 252%. Most marketing teams set a minimum ROI threshold of 100–200% (3–4× spend in revenue at target margin).
Source: HMRC — SEIS and EIS tax reliefs (gov.uk/guidance/venture-capital-schemes-apply-to-use-the-enterprise-investment-scheme). HMRC — Corporation Tax (gov.uk/corporation-tax-rates). British Business Bank — SEIS/EIS guidance (british-business-bank.co.uk).
Frequently asked questions
What is a good ROI?
This depends on the type of investment. For long-term equity investments, 7–10% annualised is commonly cited (based on historical stock market returns). For business investments, many firms target 15–25% ROI. Marketing campaigns often aim for 3–5× return (200–400% ROI).
What is the difference between ROI and CAGR?
ROI measures total return regardless of time. CAGR (Compound Annual Growth Rate) annualises that return so you can compare investments of different durations on equal terms.
Does ROI account for risk?
No. ROI only measures return relative to cost. Higher-risk investments may offer higher headline ROI, but risk-adjusted returns (such as Sharpe ratio) are needed to compare investments with different risk profiles.
How do I calculate ROI for a marketing campaign?
Marketing ROI = (Revenue attributable to campaign − Campaign cost) ÷ Campaign cost. Be careful to attribute revenue correctly — multi-touch attribution complicates this in practice.
Does Corporation Tax affect my ROI calculation?
Yes. A pre-tax ROI of 25% becomes approximately 18.75% after the 25% Corporation Tax main rate. For accurate after-tax ROI, deduct your Corporation Tax liability from the net profit before dividing by investment cost. HMRC also has rules on deductibility — some investment costs are capital expenditure and attract capital allowances rather than immediate full deduction.
What is SEIS and how does it affect ROI for UK investors?
The Seed Enterprise Investment Scheme (SEIS) gives individual investors 50% Income Tax relief on investments up to £200,000 per year in qualifying early-stage UK companies. On a £10,000 SEIS investment, £5,000 is effectively recouped through tax relief, meaning the investor only risks £5,000. Qualifying gains are also free from Capital Gains Tax. This can dramatically improve effective ROI for angel investors.
What is a good ROI for a UK business investment?
A "good" ROI depends on the risk and alternative uses of the capital. A low-risk property investment might target 5-8% annually. A business investment in a new product line might need 20-30% to justify the risk. Private equity typically targets 25-30% annualised over a 3-5 year hold. Any investment should be compared against the risk-free rate (currently around 4-5% on UK government gilts) plus a risk premium appropriate to the investment.
How does ROI differ from IRR?
ROI measures total return as a percentage of the initial investment, regardless of time. Internal Rate of Return (IRR) accounts for the timing of cash flows — an investment that returns £10,000 in year 1 has a higher IRR than one that returns £10,000 in year 5, even if the ROI is identical. IRR is particularly useful for comparing investments with different durations or irregular cash flows, such as property development or business acquisitions.
How do you calculate ROI for a marketing campaign?
Marketing ROI = (Revenue attributable to campaign − Campaign cost) ÷ Campaign cost × 100. Attribution is the hard part — not all sales driven by a campaign are easily tracked. Digital marketing typically uses last-click or multi-touch attribution models. A rule of thumb is that marketing spend should generate at least 5:1 revenue return (400% ROI) for most B2C campaigns to be profitable after product costs and overheads.
Does ROI account for inflation?
Standard ROI does not adjust for inflation — it compares nominal investment and nominal return. To calculate real ROI, adjust both the return and the original investment for inflation. On a 3-year investment with 3% annual inflation, £100,000 invested is worth roughly £109,000 in today's money three years later. If your nominal return is 15% but inflation was 10% over the period, your real return is only about 5%. For longer-term investments, inflation adjustment is important.
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