How to calculate the ROI?
There are several ways to calculate the return on investment. The most common one being:
ROI = (Profit – Investment) / Investment.
For example: if you invest €50,000 for an advertising campaign and get €100,000 in profits, the return on investment will be 100%. For every euro invested in the campaign, a return of €1 is generated.
Another example: if you invest€ 50,000 in a promotional price reduction campaign get a profit of € 45,000, the return on investment will be -10%, despite the fact that there may have been an increase in units sold.
There are also other formulas to calculate the ROI such as:
ROI = Profit / Investment
If the result is greater than 1, the ROI is positive, if it is lower, the ROI is negative.