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What is ROI? Formula, worked examples – and why web and SEO need a longer time window
ROI is one of the most widely used – and most misused – metrics in business. The formula itself is simple: return minus cost, divided by cost. The hard part is applying it honestly, especially when the investment is a website or SEO work that pays back over a long period. This guide covers what ROI is, the formula, some worked examples and the pitfalls that often lead to ROI being calculated wrongly.
What ROI means
ROI stands for Return on Investment and measures the return on an investment in relation to what it cost. The result is expressed as a percentage: a positive ROI means the investment has returned more than it cost, a negative one that it has made a loss. The measure is used to compare the profitability of anything from new machinery to a marketing campaign.
The ROI formula – how to calculate it
The standard formula is:
ROI = (revenue from the investment − cost of the investment) / cost of the investment × 100
Always calculate on the net figure – what the investment returned minus what it cost – not just on gross revenue. For example, you invest SEK 50,000 and get SEK 80,000 back.
ROI = (80,000 − 50,000) / 50,000 × 100 = 60%.
The investment therefore returned SEK 0.60 in profit for every SEK 1 invested.
ROMI – the ROI of marketing
When people talk about ROI for marketing specifically, the term ROMI (Return on Marketing Investment) often comes up. It is the same formula, but with a narrower denominator: only the marketing costs are counted, not all the money invested. The point is to isolate the contribution of marketing, separate from other business costs. ROMI is an industry term rather than a formal accounting standard, but it is widely used when you want to measure the contribution of a channel or campaign.
ROAS vs ROI – when to use which measure
ROAS (Return on Ad Spend) and ROI measure different things and are easily confused:
- ROAS = ad revenue / ad cost. Quick, and good for managing individual campaigns – but it ignores margin and other costs.
- ROI = net profit / total investment. Shows actual profitability and is suited to assessing the bigger picture.
A campaign can have an impressive ROAS and still make a loss if the margin is low. Use ROAS at campaign level and ROI at strategy level.
Why ROI is hard to calculate for web and SEO
This is where most ROI calculations break down. For a website or SEO work, the static formula cannot simply be applied as it stands, for three reasons:
- The time window. SEO and content have a cumulative effect – traffic and leads build up over time and keep delivering a return without a matching new investment. If you calculate ROI after three months, you will almost always get a negative figure; that does not mean the investment is bad, just that the time window is wrong.
- Attribution. A customer finds you through organic search, returns via direct traffic and only buys later. With last-click attribution, the purchase is then credited to direct traffic – not to the SEO that actually brought the customer in. As a result, web investments are systematically underestimated.
- What counts as a return. A better website does not just bring in direct sales; it also brings more quote requests, higher conversion on existing traffic and a stronger brand. All of that is a return – but it does not show up in a simple sales figure.
The point is not that ROI is useless for websites, but that it has to be calculated over the right time window and with an honest picture of what actually drives the business. If you want to calculate the return on conversion work specifically, see CRO: price and ROI.
What is a good ROI?
There is no universal figure – what counts as a good ROI depends on the industry, the risk and the alternatives you compare it with. A positive ROI is the basic requirement, but an investment with a 30% ROI and low risk can be better than one with an 80% ROI and high risk. For web and SEO, the most important thing is to measure over a long enough time window before you judge the result.
ROI calculator: work out your ROI
Use the calculator below to work out the ROI on an investment, or switch to ROAS mode to see whether an ad campaign pays for itself given your margin.
Work out your ROI
Work out what an investment returns. The version in the SEO articles also shows the payback period.
- ROI60.00%
- Net profitSEK 30,000
The investment returned more than it cost.
The model assumes traffic builds up linearly until full effect and holds steady after that. SEO ROI is an estimate: the actual return depends on competition and starting point.
More free toolsCalculating ROI on web and SEO is as much about business understanding as about maths – knowing what should actually be counted, and over what period. Need help setting up your measurement correctly? Get in touch.
Common questions about ROI
What is ROI?
ROI (Return on Investment) measures the return on an investment in relation to its cost. The formula is (revenue − investment) / investment × 100, and the result is expressed as a percentage. A positive ROI means the investment has returned more than it cost.
How do you calculate ROI?
ROI = (revenue from the investment − cost of the investment) / cost of the investment × 100. Example: you invest SEK 50,000 and get SEK 80,000 back → (80,000 − 50,000) / 50,000 × 100 = 60% ROI.
What is the difference between ROI and ROAS?
ROI measures net profit in relation to the whole investment and shows actual profitability. ROAS measures ad revenue in relation to the ad cost alone and shows how effective a campaign is – but takes neither margin nor other costs into account. A high ROAS can therefore hide a loss if the margin is low.
What is ROMI?
ROMI (Return on Marketing Investment) is a variant of ROI where only marketing costs are counted in the denominator – not all investments. It is used to isolate the contribution of marketing specifically. The formula is the same as for ROI.
What is a good ROI?
It depends on the industry and type of investment – there is no universal figure. A positive ROI is the basic requirement, but what counts as 'good' depends on the alternative investments and the level of risk you compare it with. For web and SEO, a longer time window is normally needed – often many months – before ROI gives a fair picture, because the effect builds up over time.
