ROI Calculator

How to use this ROI calculator

1. Enter the full amount you invested: the purchase price plus setup, delivery, training or anything else it took.
2. Choose how you measure the return. Use Total returned if you know the extra profit it brought in, or Monthly gain if it adds a steady amount each month.
3. Enter the period in months: how long the return took, or how long you expect it to take.
4. Read your ROI, net profit, annualized ROI and payback period. Copy the result into your notes or a message to a business partner.

It works for any small-business purchase: a new mower, a camera, a software subscription, a round of ads or a course that lets you charge more.

How to calculate ROI

Return on investment compares what you gained with what you spent, as a percentage of the spend.

Worked example. A cleaning business spends $6,000 on new equipment. Over 12 months, the extra jobs it makes possible bring in $9,000 of extra profit. Net profit is $9,000 − $6,000 = $3,000, so ROI = $3,000 ÷ $6,000 = 50%. Every $1 invested came back as $1.50.

Annualized ROI

A 50% return in 6 months is much better than 50% in 2 years. Annualized ROI turns any period into a yearly rate so you can compare them.

Invest $5,000 and get $7,500 back. Over 24 months, the 50% ROI annualizes to 22.5%. Over 6 months, it annualizes to 125%.

Payback period

In the equipment example, $9,000 over 12 months is $750 a month, so the $6,000 is paid back in 8 months. Everything after that is profit.

Marketing ROI: calculate it on profit, not revenue

The most common ROI mistake is using revenue as the return. Revenue includes money you spend again to deliver the work.

Example. A freelance designer spends $1,500 on ads over 6 months. The ads bring in new clients who pay $8,000 in invoices. Delivering that work costs $3,200 in subcontractors, stock assets and software, so the gross profit is $4,800.

• Marketing ROI on profit: ($4,800 − $1,500) ÷ $1,500 = 220%. Payback: 1.9 months.
• The same campaign measured on revenue: ($8,000 − $1,500) ÷ $1,500 = 433.3%, which overstates it by almost double.

Two more things to watch with marketing ROI. Only count clients the campaign actually brought in, so ask new clients how they found you. And don't trust the annualized figure on short campaigns: 220% in 6 months annualizes to 924%, a number that assumes you could keep reinvesting at that rate all year.

ROI examples for small-business purchases

These are worked examples, not benchmarks. Plug in your own numbers, because the same purchase can pay off very differently for two businesses.

Time saved counts as a return when you can bill it. In the software example, 4 hours a month saved at a $75 billable rate is $300. If those hours wouldn't be billed, the saving is real but smaller. The course example assumes a $5 an hour rate increase on 80 billable hours a month.

How to estimate the return before you buy

Most ROI questions come before the purchase, when the return is still a guess. Build the guess from things you can count:

• More work: extra jobs a month × profit per job. A second pressure washer that lets you take 3 more jobs a month at $120 profit each adds $360 a month.
• Time saved: hours saved a month × your billable rate, but only if you'll fill those hours with paid work.
• Higher prices: the rate increase × billable hours a month.
• Lower costs: what you stop paying, like a subscription the new tool replaces.

Then run it twice: once with your realistic estimate and once with half of it. If the purchase still pays back within its useful life in the low case, it's a safe bet. If it only works in the best case, wait or start smaller.

What is a good ROI for a small business?

There's no single number. A good return beats your other uses of the same money, by enough to cover the risk that it doesn't work out. Ask three questions:

• Does it beat the cost of the money? If you borrow to buy it, the annualized ROI should comfortably beat the loan's effective APR. The business loan calculator shows that rate, fees included.
• Does it pay back well inside its useful life? A laptop that takes four years to pay back may need replacing before it does.
• How sure is the return? Money saved on a cheaper supplier is close to certain. Revenue from a new ad channel isn't. Demand a higher ROI from riskier bets.

For purchases that add fixed monthly costs, check the break-even calculator too. It tells you how many extra jobs or hours a month cover the new cost.

Common ROI mistakes

• Using revenue instead of profit. Subtract what it costs to deliver the work. The profit margin calculator helps you find that number.
• Leaving out the full cost. Include setup, training, shipping and ongoing fees, not just the sticker price.
• Comparing different periods. Use annualized ROI to compare a 3-month campaign with a 2-year equipment purchase.
• Counting returns that would have happened anyway. A client who was already going to hire you isn't a return on your ads.
• Ignoring taxes. The calculator works before tax. Business purchases can change what you owe, so the after-tax return can differ.

Track the return in your invoices

An ROI estimate becomes real only when clients pay. The simplest way to measure it is to look back at what you invoiced and collected before and after the purchase.

Onigiri keeps every invoice with its status (Draft, Sent, Overdue or Paid), and PRO adds income tracking, so you can see what new work actually brought in. The free plan covers 3 invoices a month with unlimited clients, and PRO is $12/month or $108/year for unlimited invoices. For a one-off invoice, the free invoice generator makes a PDF without signing up.

Frequently asked questions