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ROI Stands For Return On Investment

ROI or Return on Investment is an equation used to find the profitability of an investment as a total percentage of cost. As a business owner, ROI will tell you how efficient your total expenditure is in terms of profitability. ROI is similar to ROMI, but ROMI is specific to the marketing investment, ROI could refer to marketing but also product investment, branding, rent, etc.

How To Calculate ROI?

First, calculate your income, then subtract from that the total cost of investment. For example $15,000 – $5,000 = Net profit of $10,000

Then, do the following equation (Profit / Investment) x 100 = ROI

So in this instance, ROI = 200%

 

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