ROI

ROI is gain minus cost, divided by cost. If you spend NOK 10,000 and the investment brings in NOK 15,000 in gross profit, you are left with NOK 5,000. ROI is then 5,000 / 10,000 = 50 percent. The number works for anything from an ad campaign to a new website or a new machine.

The difference between ROI and ROAS

ROAS measures revenue per krone spent on ads. ROI measures what you keep once costs are deducted. The difference can be large.

You spend NOK 5,000 on ads and sell for NOK 20,000. ROAS is 20,000 / 5,000 = 4, and that looks good. But the goods cost you NOK 12,000, so gross profit is NOK 8,000. Deduct the ad spend, and you are left with NOK 3,000, so ROI is 3,000 / 5,000 = 60 percent.

Had the goods cost NOK 16,000, ROAS would still have been 4. But you would have lost NOK 1,000, and ROI would have been minus 20 percent.

What you can do today

Pick one thing you have spent money on in the last year, such as ads or a new website. Write down what it cost, including your own time, and how many customers it brought. Multiply the number of customers by what a customer is worth in profit, subtract the cost and divide by the cost. That gives you a rough ROI and a better basis for your next budget.