Understanding return on investment
Return on investment (ROI) is the single most common way to judge whether money spent was worth it. It measures the gain from an investment relative to its cost, as a percentage, so you can compare very different decisions — a marketing campaign, a new machine, a training course, a stock purchase — on the same scale. The formula is simple: net gain divided by cost, times 100.
Enter the amount you invested and the total amount you got back (or expect to). The calculator returns your net gain, your ROI as a percentage, and — if you enter a time period — the annualised ROI, which restates the return on a per-year basis so a six-month project and a three-year one can be compared fairly. A 30% return earned in six months is far stronger than the same 30% earned over three years, and annualising makes that obvious.
ROI is powerful precisely because it is simple, but that simplicity has limits. It ignores the timing of cash flows within the period, does not account for risk, and is only as honest as the costs you include — leave out your own time or ongoing expenses and the ROI will flatter the decision. For business investments, count every associated cost, not just the headline price.
Use ROI to rank options and set a hurdle: if a project cannot beat the return you would get elsewhere, think twice. Tallium tracks the real revenue and cost tied to your projects and products, so the numbers you feed into decisions like these come straight from your books rather than guesswork.
Frequently asked questions
Stop juggling spreadsheets. Tallium runs invoicing, VAT & corporate tax, POS and inventory in one simple app.
Try Tallium free