What is ROI?
Return on Investment — how much you gained relative to what you put in.
ROI measures the payoff of a decision: (gain minus cost) divided by cost. Spend $1,000 on ads that generate $3,000 in profit, and your ROI is 200%. It's the universal 'was this worth it?' number.
ROI is used for everything: marketing spend, equipment, hiring, even your own time. If you only track one lens on your spending decisions, this is a strong candidate.
Watch the time dimension: a 50% ROI in a month crushes a 50% ROI over ten years. Always ask 'over what period?'
Related terms
Definitions from the Business Dog Glossary — educational, occasionally satirical, never financial advice.