Return on investment (ROI) is a metric evaluating the profitability or gain of a venture. This performance indicator measures an asset’s effectiveness at generating net profit or income, guiding efficient resource allocation, business strategy, and decision-making.
A positive ROI occurs when earnings exceed expenses. A negative ROI happens when expenses outweigh profits. For example, if a marketing campaign costs $4,500 and generates $6,000 in revenue, it delivers a positive ROI.
Here’s the formula for calculating ROI as a percentage, allowing for easy comparison with returns from other investments:
ROI = (Profit earned - Investment) / Investment x 100
Using the example above, the business earned $6,000 on a $4,500 investment, so its ROI is:
($6,000 - $4,500) / $4,500 x 100
= 33.33%
Visit the Webflow blog to learn more about increasing ROI by building valuable design systems and discovering effective marketing strategies for clients.
Get the best, coolest, and latest in design and no-code delivered to your inbox each week.