Glossary
Return on Investment (ROI)
How much profit you made relative to what you put in, expressed as a percentage of your original investment.
Return on investment, or ROI, tells you how much profit you made relative to what you put in. Unlike return on ad spend, ROI is built on profit, not revenue, which makes it the more honest measure. You calculate it by dividing your net profit by your total cost, then turning it into a percentage.
Net profit / Total cost x 100 = ROI
$500 profit / $1,000 cost x 100 = 50% ROI
A 50% ROI means that after covering all your costs, you kept an extra fifty cents for every dollar you invested. ROI can also be negative, which simply means you spent more than you got back. That honesty is exactly why it is useful.
ROI is the number to keep in mind whenever a product promises big results. Many make-money offers quote revenue or a single lucky day, but the question that matters is what you actually keep after every cost is paid, and how that compares to what you spent to get there. That comparison is ROI.
Two cautions. ROI ignores time, so a 50% return in a week is very different from 50% over three years. And it is only as good as the costs you remember to include, so count the tools, the fees, and your own time. To dig into the profit side, read revenue vs profit, and to judge an offer, read how to evaluate a make-money product.