Before you buy the second machine, run the Diwali ad campaign, renovate the shop or hire a salesperson, one question decides it: will the money come back with more? Return on investment answers that in a single percentage — net gain ÷ cost — and this calculator computes it for any project, campaign or purchase, with the payback period, annualised ROI for fair comparison across durations, and a break-even check. It works for a ₹15,000 Instagram push and a ₹15 lakh delivery van alike.
The formulas
- ROI = (Gain − Cost) ÷ Cost × 100. Spend ₹2,00,000 on a campaign that produces ₹5,20,000 of gross profit → ROI 160%.
- Annualised ROI = (1 + ROI)^(1 ÷ years) − 1, so a 160% return over 2 years (61% a year) can be compared with 30% in 6 months (186% a year).
- Payback period = Cost ÷ periodic net gain — how many months until the outlay is recovered.
- Break-even gain = Cost: the gain at which ROI is zero.
Use profit, not revenue, as the gain: a campaign that brought ₹5.2 lakh of sales at 35% gross margin produced ₹1.82 lakh of gain on ₹2 lakh — an ROI of −9%. The gross margin calculator supplies the margin figure; for ad campaigns, ROAS gives the revenue-based view first.
How to use the calculator
- Enter the total cost — purchase price, installation, training, working capital tied up, and for campaigns the creative and management fees.
- Enter the expected or actual gain (net profit generated, or savings) and the period over which it accrues.
- Read the ROI, annualised ROI and payback months.
- Test optimistic and pessimistic gains; if the pessimistic case still clears your hurdle rate (say, the loan rate plus a margin), proceed.
- For financed purchases, compare the annualised ROI with the loan's effective rate from the EMI calculator.
Typical small-business decisions
| Decision | Cost | Gain to measure |
|---|---|---|
| New machine | Price + install + GST not credited | Extra contribution margin + labour saved − maintenance |
| Marketplace listing | Fees, photos, packaging | Net margin after commissions (see seller pricing) |
| Hiring a salesperson | Loaded cost from the employee cost calculator | Gross margin on incremental sales |
| Renovation | Capex + lost sales during work | Uplift in footfall × average margin |
| Solar rooftop | Net of subsidy | Electricity saved per year for 25 years |
| Software subscription | Annual fee | Hours saved × hourly cost |
Which loan to use for the outlay, and at what rate, is compared in MSME loan schemes in 2026.
What ROI misses
- Timing: ₹1 lakh in year 5 is worth less than ₹1 lakh next month; annualised ROI helps, NPV is better for long projects.
- Risk: a 40% ROI with a 50% chance of failure is a 20% expected return with a chance of losing the capital.
- Capacity: a machine that raises capacity is only worth it if you can sell the extra output — check capacity utilization.
- Tax: depreciation on the asset reduces tax; interest on the loan is deductible — the after-tax ROI can be higher than the pre-tax figure.
Related tools
- ROAS calculator — revenue return on ad spend.
- EMI calculator — cost of financing the investment.
- CAGR calculator — annualised growth of the returns.
- Depreciation calculator — tax effect of the asset.
- Profit margin calculator — the margin that turns sales into gain.