ROI Calculator — Return on Investment, Gain & Annualized %
Return, net gain, and annualized ROI on any spend.
Results
- Initial investment
- $10,000.00
- Final value
- $13,500.00
- Net gain
- $3,500.00
- ROI %
- 35.00%
- Annualized ROI %
- 16.19%
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Procupy customers see 3–12% savings on managed spend in the first 90 days. On a ₹10 Cr spend base, that's ₹30L–₹1.2 Cr — typically a 5–20× ROI on the platform in year one.
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ROI formula
Return on Investment is the simplest way to express the profitability of a spend. The formula is:
ROI % = (Net Gain / Cost of Investment) × 100
Worked example: you invest $10,000 and it grows to $13,500 over 2 years. Net gain is $3,500, so total ROI is 3,500 / 10,000 × 100 = 35%. The annualized ROI — the equivalent compound annual return — is ~16.2%.
Annualized ROI: why time matters
Total ROI ignores the length of the investment, which makes it impossible to compare a 5-year hold with a 2-year hold using raw numbers alone. The annualized formula fixes this by expressing the gain as a compound annual growth rate:
Annualized ROI = ((Final / Initial)^(1/years) − 1) × 100
Consider two investments. Investment A returns 50% over 5 years — that sounds impressive, but it's only ~8.4% annualized. Investment B returns 30% over 2 years, which works out to ~14% annualized. On a like-for-like basis, B is the better-performing investment, even though its headline number is smaller. Always annualize before comparing.
When ROI is misleading
- Ignores risk — a 20% ROI on a venture bet is not comparable to a 20% ROI on a treasury bond.
- Ignores cash flow timing — money received earlier is worth more than money received later (use IRR or NPV instead).
- Doesn't account for taxes or inflation — a 10% nominal ROI in a 6%-inflation environment is only ~4% in real terms.
- Can't compare unequal time horizons without annualizing — a 5-year return and a 1-year return are not directly comparable as raw percentages.
FAQs
What is a good ROI?
It depends on the asset class and risk profile. Historically, broad stock-market index funds have averaged 7–10% annualized over the long term. SaaS investments often target a 5–12% payback period (which translates to a strong ROI over a multi-year hold). Venture capital and high-risk private equity typically aim for 15%+ annualized to compensate for failure rates. Always compare ROI against a relevant benchmark and the cost of capital, not in isolation.
How do I calculate annualized ROI?
Use the formula Annualized ROI = ((Final / Initial)^(1/years) − 1) × 100. For example, $10,000 growing to $13,500 over 2 years gives ((13,500/10,000)^(1/2) − 1) × 100 ≈ 16.19% annualized. This compound-growth view lets you compare investments with different durations on equal footing.
What's the difference between ROI and IRR?
ROI is a simple ratio of total gain to cost — it does not consider when cash flows arrive. IRR (Internal Rate of Return) is the discount rate that makes the net present value of all cash flows equal to zero, so it accounts for the timing and size of every inflow and outflow. For multi-period investments with irregular cash flows, IRR is the more accurate measure. ROI is easier to communicate and works well for one-time investments with a single exit value.
Can ROI be negative?
Yes. If the final value is less than the initial investment, ROI is negative — you lost money. For example, $10,000 falling to $8,000 over 1 year gives an ROI of −20%. The annualized ROI is also negative in such cases. A negative ROI doesn't always mean the decision was wrong (some losses are part of a broader portfolio strategy), but it does mean that specific investment underperformed.
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