ROI or Return on Investment is the fundamental driving force behind any business or financial undertaking. Whenever you invest resources into anything, like money or time, it’s important to fully understand what returns or benefits you’ll get out of it beforehand.
An ROI calculator makes it quick and easy for potential customers and clients to pinpoint what they can gain from your product or service. It’s a great tool that helps them visualize and see into the immediate future exactly how you can solve existing issues and pain points, and grow their bottom line. This additional insight and transparency will let you convert more visitors into leads and more leads into actual sales.
How to Calculate ROI
The simplest way to calculate ROI is by dividing the profit by the total investment amount and then multiplying it by 100%.
Profit is calculated by taking the current value of the investment and subtracting the total capital investment.
A more complete formula for ROI looks like this:
If you invest $1,000 into a project and get back $1,300, your profit would be $300. Dividing the $300 profit with your original investment of $1,000 would give you an ROI of 30%.
It’s also possible to get a negative ROI if the asset or investment loses value to the point that it amounts to less than the original investment value.
Use Cases For an ROI Calculator
An ROI calculator can clearly explain the benefits of complex investments. Some notable use cases are:
The following examples are also available as a template.
ROI Calculator Real Estate
A rental property calculator can help you determine the returns of a new rental property. This calculator form accounts for both the up-front investment (down payment, closing costs, initial renovations) as well as the ongoing costs.
Email Marketing ROI Calculator
Email marketing done right has one of the highest return on investment of all online marketing channels. If you want to check the performance of your email marketing campaigns, calculating your email marketing ROI is a necessity. Find your Email Marketing ROI with our easy calculator. Vary the numbers to see how changes in your results directly impact your ROI and conversions.
Google Ads Calculator
Create a Google Ads budget calculator to estimate costs, Return on Investment (ROI), and Return on Ad Spend (ROAS) from your Google Ad campaigns.
Different Ways to Calculate ROI
There are many ways to calculate ROI and you can customize an ROI calculator for your own specific needs.
If your clients resell your products or produce the items themselves, their basic ROI calculations will look slightly different. They’ll have to add up the Cost of Goods Sold or COGS which includes things such as production costs, storage, shipping and marketing to come up with an accurate value for their total investment.
If you offer a product or service that directly impacts business operations, such as marketing, training, equipment or consumables, you’ll want your ROI calculator to show how the benefits can improve their bottom line. Program or project benefits can be in the form of cost savings or additional revenue.
Projecting ROI for a rental property is slightly more involved. Since most rental properties are financed, you need to add up all the out-of-pocket expenses such as the downpayment, closing costs, remodeling and maintenance to get the total cost of the investment.
Profit or cash flow is calculated by subtracting your monthly mortgage payment from the property’s rental income. Multiply it by 12 to get the total cash flow for the year.
Once you’ve gotten the total investment and cash flow for the year, you can then calculate for the actual ROI. If the rental property sits idle and vacant, the total cash flow for the year also goes down.
Financial advisors, banks and other entities that offer investment vehicles can also benefit a lot from an annualized ROI calculator to illustrate how much a long-term investment actually grows on a yearly basis while taking into consideration the effect of compounding growth.
A simple formula for annualized ROI or annualized return looks like this:
In the formula above, n represents the number of years the investment is held. This equation can also be modified to show monthly or daily returns quite easily.
Let’s calculate the annualized return for an asset, such as real estate or stocks, that grew in value from $100,000 to $150,000 in 3 years.
After some calculations, we arrive at an annualized ROI of 14.47%. This means that for every year the asset was held, its value grew by an average of 14.47%. One can then take this figure and extrapolate year-on-year growth over an extended period of time.
If you simply take the $50,000 profit and divide it by 3, you’re only accounting for growth in relation to the original investment. Although it’s easier to calculate, it doesn’t paint the complete picture of the asset’s growth or the actual rate of return year-to-year.
With our calculator builder, you can create different kinds of ROI calculators and customize them to your specific needs. You can simply plug in the same ROI formulas and calculations you currently use in Excel or Google Sheets, then adjust the layout and structure of the calculator to make it more appealing to your target audience.
Why Use an ROI Calculator
Depending on the industry and application, ROI calculators will typically address important customer concerns such as:
Potential benefits and savings
When an investment will pay off
The real/tangible value of your product
Cost to benefit ratio
The usefulness of ROI calculators isn’t just limited to B2B transactions and investing either. Regular people and retail consumers will appreciate having access to an ROI calculator that lets them properly evaluate the benefits of your offer to determine whether it’s actually worth the cost. It’s an awesome tool that will help demystify new and complex ideas that the general public isn’t very familiar with.
Reinforce Your Value Proposition
An ROI calculator helps cement your value proposition in the minds of your target audience and will give them that extra nudge to click on your call-to-action. More importantly, it also lets you highlight your competitive advantage over your competitors.
If people can play around with the numbers themselves and see exactly how much they stand to gain, you can do away with lengthy sales pitches and let the numbers do the talking.
It also gives your audience immediate access to the information and data that they’re looking for. They can simply change the parameters and put in different figures so they can see for themselves whether they merely want to dip their toes in or if they want to spring for the full package with all the bells and whistles.
It will save you and your clients a lot of time and effort going back and forth talking about the pros and cons of different scenarios. You won’t have to hold their hand taking them through your marketing funnel because you’re empowering them with the tools and information they need to make decisions on their own. They’ll be comfortable and confident with their final decision because they won’t feel like they were led around or tricked into signing up using dodgy marketing tactics.
In short, you’ll be able to convert more visitors into quality leads who already have a pretty good idea of what they’re signing up for.
More Engagement and Improved SEO
Adding an ROI calculator to your website automatically makes it more interactive and engaging. This means your visitors will spend more time on your site and they will likely come back for more in the future because you’re providing a very useful resource that’s hard to find somewhere else.
When visitors see an interactive ROI calculator on your site, they are less likely to hit the back button and move on to the next search result which could lead them to one of your competitors. Most people will want to try it out on their own to see if it’s actually worth their time. This lowers your bounce rate and will improve your organic SEO rankings in a relatively short period of time.
An ROI calculator also lets you illustrate abstract concepts more easily and demonstrate exactly how you can improve their bottom line. You can use it to support different types of content on your site such as:
FAQ and Help pages
Products and Services section
Just like how a picture is worth a thousand words, an interactive ROI calculator can easily replace lengthy explanations. As well as diagrams and other multimedia elements that you typically use when trying to communicate the value of your product.
In many instances, you can simply come up with a compelling title or question regarding common pain points that your target audience regularly experiences, and let your custom ROI calculator do the talking and address the issue directly. Just add a call-to-action to the calculator and you’ll be able to capture their information, which will boost your lead generation efforts.
An ROI calculator also does wonders for your brand recognition and name recall because people don’t necessarily see it on every website. You’ll be able to stand out more and distinguish yourself from your competition, specifically those who are also located in your target market which can make a huge impact on your local SEO performance.
Collect More Clicks and Data
Another extremely important benefit that our custom ROI calculators can deliver is the ability to collect more data about your target market. This data is invaluable to your business and allows you to understand your customers in more detail.
All our calculators can be easily configured to act like a survey form that not only collects their contact info, but also detailed information about their requirements. This data can then be automatically sent to your CRM platform or database using the different application and platform integrations we’ve built into our DIY calculator builder.
Even if the first engagement doesn’t lead to a successful conversion, you can use the data you’ve collected to gain more insight into your leads and be more prepared when your team eventually reaches out to them on a follow-up call.
You can also aggregate the data for further analysis and fine-tune your offerings, and even your business model, to better address what the market is looking for.
How to Add a custom ROI Calculator to your Website
We have a comprehensive Help section that will walk you through all the steps you’ll need to start building your own calculator.
We’ve also made it easier to spin up a new custom calculator by providing you with dozens of Templates to choose from. Just pick out a pre-made template and start editing it with our calculator builder. You can browse through the templates to see the different layouts and calculations that are possible with our builder and use it as inspiration for your own calculators. Templates are fully adjustable, so they can give you the perfect kickstart.
You can customize the layout and look of your calculator with simple drag-and-drop operations. And you can make it so that your calculator blends in seamlessly with the design of your website. All you need is the ability to edit the HTML code of your pages so that you can insert the custom code that will be automatically generated for your calculator widget.
Our calculators also work seamlessly with all the popular website building and CMS platforms.
If you want to try it out, you can create your own ROI calculator today and add it to your website for free until you exceed 100 monthly visits. After that, it costs less per month than what a developer normally charges per hour.
Our pricing is also scalable depending on the number of features you want and the number of monthly visits and submissions you get on your calculator widget. For example, if you’d like integration with Zapier, you’ll need to move to our Pro plan while the ability to create multi-page calculators and access to our API is only available through our Premium plan.
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