Small Business Dictionary

Return On Investment (ROI)

Return on Investment (ROI), also known as Rate of Return (ROR), Rate of Profit or Sales Per Lead, is a ratio for net profit, revenue, or loss divided by the investment generated for a specific activity, but minus the original investment. For example, if you invest $2,000 in advertising for a direct response postcard campaign to sell widgets, and you create $6,000 in sales, your Return on Investment (ROI) would be 200 percent ($6,000 - $2000 original investment ) = $4,000 profit.