Calculate return on investment for any business spend — advertising, equipment, staff, training — plus payback period.
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How This Works
ROI = (net return − investment cost) / investment cost × 100. For multi-year investments, total net return = annual benefit × years − total ongoing costs. Payback period = upfront cost ÷ annual net return. Simple ROI doesn't account for time value of money (NPV) — for large capital investments, use discounted cash flow analysis instead.
For paid advertising (Google, Meta), a 3:1 revenue-to-spend ratio (300% ROI) is the minimum benchmark — after paying for the ads, you need enough margin left to cover goods/services and overhead. At 20% gross margin, you need 5:1 to break even. High-volume e-commerce typically targets 4:1–8:1 ROAS (Return on Ad Spend). Brand advertising (which builds long-term value rather than immediate sales) is harder to measure with simple ROI.