Enter values to calculate your return.
Initial cost £5,000.00; final value £6,500.00; net profit £1,500.00.
| Metric | Investment A | Investment B |
|---|---|---|
| Total cost basis | — | — |
| Net profit or loss | — | — |
| Total ROI | — | — |
| Annualized ROI | — | — |
Initial cost + additional costsFinal value − total cost basis(Net profit or loss ÷ total cost basis) × 100, equivalently ((final value ÷ total cost basis) − 1) × 100.Final value ÷ total cost basis. A multiple of 1.00× is break-even.((final value ÷ total cost basis)^(1 ÷ years) − 1) × 100CAGR is appropriate when there is one beginning value, one ending value, no intervening cash flows, and a positive start and end. It is a smoothed compound rate, not a record of the return earned in every individual year. For multiple contributions or withdrawals, use IRR—or XIRR when cash-flow dates are irregular.
Initial cost = £5,000; final value = £6,500; additional costs = £50; holding period = 2 years.
Total cost basis = £5,000 + £50 = £5,050. Net profit = £6,500 − £5,050 = £1,450.
ROI = £1,450 ÷ £5,050 × 100 = 28.71%. Annualized ROI = (£6,500 ÷ £5,050)^(1 ÷ 2) − 1 = 13.45%.
Interpretation: You earned £1,450 after costs, equal to 28.71% over two years and 13.45% per year.
Initial cost = £8,000; final value = £6,200; additional costs = £200.
Total cost basis = £8,000 + £200 = £8,200. Net loss = £6,200 − £8,200 = −£2,000.
ROI = −£2,000 ÷ £8,200 × 100 = −24.39%.
Interpretation: You lost £2,000 after costs; the final value recovered 75.61% of the total cost basis.
Purchase and improvement cost = £220,000; sale proceeds = £270,000; stamp duty, legal, financing, holding, and sale costs = £24,000.
Total cost basis = £220,000 + £24,000 = £244,000. Net profit = £270,000 − £244,000 = £26,000.
ROI = £26,000 ÷ £244,000 × 100 = 10.66%.
Interpretation: Ignoring the £24,000 of transaction and holding costs would overstate ROI as 22.73%. Include only costs and proceeds that belong to the same property analysis.
A campaign generates £30,000 of attributable revenue. Product and fulfilment costs are £18,000 and ad spend is £5,000, leaving attributable profit after all listed costs of £30,000 − £18,000 − £5,000 = £7,000.
Marketing ROI = £7,000 ÷ £5,000 × 100 = 140%. ROAS = £30,000 ÷ £5,000 = 6.00×, or 600%.
Interpretation: ROAS compares attributable revenue with ad spend; ROI uses attributable profit after relevant costs. Revenue should not be entered as profit. Attribution assumptions can materially change either metric.
Simple ROI ignores the holding period, timing of interim cash flows, inflation, taxes, financing structure, risk, and opportunity cost. Annualized ROI adds time but still assumes one beginning and one ending value. Choose a metric that matches the decision:
| Metric | What it measures | Handles cash-flow timing? | Best fit |
|---|---|---|---|
| ROI | Total profit or loss relative to total cost | No | Quick, same-period comparisons |
| CAGR | Smoothed compound annual growth from start to end | Only start, end, and duration | Positive start/end values with no interim cash flows |
| IRR/XIRR | Rate that sets NPV of multiple cash flows to zero | Yes; XIRR uses exact dates | Projects, portfolios, or property with multiple flows |
There is no universal good ROI. A useful benchmark should match the investment’s time period, risk, asset type, financing, liquidity, and currency, and the comparison should state whether returns are before or after fees, inflation, and taxes. Higher-risk investments generally require higher expected returns as compensation, but higher expected return is not guaranteed. Compare annualized, after-cost figures with a relevant market index, hurdle rate, borrowing cost, or realistic alternative rather than an unsupported percentage target.
Author: Starlight Tools Editorial Team. Reviewed by: Starlight Tools Calculation Review Team, which reviews the financial mathematics and client-side implementation of Starlight calculators. Last reviewed: 16 July 2026.
Method: The calculator uses (final value − total cost basis) ÷ total cost basis for simple ROI and the geometric CAGR formula for annualization. Entered additional costs are added to the initial cost. Money is displayed to 2 decimal places; percentages and multiples are displayed to 2 decimal places, while calculations retain JavaScript floating-point precision. Date periods use elapsed milliseconds divided by 365.2425 days per year.
Calculation verification: We checked representative cases: £5,000 to £6,500 with £50 costs gives £1,450 profit and 28.71% ROI; £8,000 to £6,200 with £200 costs gives −£2,000 and −24.39%; £1,000 to £0 gives −100%; and £1,000 to £1,210 over 2 years gives 10.00% annualized ROI.
Sources: The US Securities and Exchange Commission’s Investor.gov explains how fees and expenses reduce investment returns and how risk relates to uncertainty and required return. Microsoft documents IRR for a series of cash flows. Google Ads defines ROI as profit divided by spend and ROAS as conversion value divided by spend.
Important: This calculator is informational, not financial, tax, legal, or investment advice. Confirm inputs, tax treatment, cash-flow timing, and results with an appropriate professional before making decisions.
ROI means return on investment. It expresses the net profit or loss as a percentage of the total cost basis, making differently sized investments easier to compare.
Subtract total cost basis from final value to get net profit or loss. Divide that result by total cost basis and multiply by 100: ROI = (final value − total cost basis) ÷ total cost basis × 100.
Yes. Enter the total amount received or current ending value, including the returned original capital. Do not enter profit alone.
Profit is an amount of money: final value minus total cost basis. ROI is that profit or loss divided by total cost basis and shown as a percentage.
ROAS divides attributable revenue by advertising spend. ROI uses attributable profit after relevant costs, divided by total cost. ROAS can look positive even when a campaign is unprofitable.
Simple ROI measures total return and ignores time. CAGR is the constant compounded annual rate connecting a positive beginning value to a positive ending value over a stated period.
Acquisition, holding, and sale costs increase the cost basis and reduce ROI. This calculator includes entered additional costs but does not estimate taxes; add known taxes only when they belong in the comparison you are making.
Yes. Final value below total cost basis produces a negative ROI. A final value of zero is a complete loss and equals −100% ROI when the cost basis is positive.
Turn on Annualize this return and supply dates or a positive holding period. The calculator uses (final value ÷ total cost basis)^(1 ÷ years) − 1. Annualization is unavailable when final value is zero or negative.
There is no universal good ROI. Compare an annualized, after-cost return with a relevant benchmark and consider the period, risk, asset type, financing, inflation, taxes, and available alternatives.
Drop from 100 to 50? You need to double (100% gain) just to break even—percent moves aren’t symmetric.
+50%, then −50% leaves you down 25%, with a CAGR of about −13.40% over two periods. Geometric returns smooth the ride, but not the loss.
A 1% annual fee on a 7% return turns 30 years of growth into ~6% CAGR—small drags become huge over time.
“+20% ROI” over 10 years is only ~1.84% CAGR. Always ask “per year?” before celebrating.
Projects with quick paybacks can beat slower “bigger” returns once you annualize—time is a multiplier, not a footnote.