ROI (Return on Investment)
Net profit as a percentage of the money invested to earn it. For a product, it compares profit per unit with what the unit cost you.
What Is ROI?
ROI (Return on Investment) measures how much profit each dollar you invest brings back.
ROI = (Net Profit ÷ Amount Invested) × 100
ROI for an Amazon Product
For inventory, the investment is what the unit cost you to buy and land. If a unit costs $6.00 and returns $8.25 of net profit, ROI is 137.5%: every dollar tied up in stock came back with $1.38 of profit.
ROI vs Profit Margin vs ROAS
- Profit margin divides profit by the selling price - it tells you how much of each sale you keep
- ROI divides profit by your cost - it tells you how hard your capital is working
- ROAS divides ad revenue by ad spend - it covers advertising only and ignores every other cost
A cheap product can have a modest margin and an excellent ROI, which matters when cash for inventory is the constraint.
How SellerLegend Helps
SellerLegend calculates profit per product with COGS, Amazon fees and PPC spend included - the inputs ROI depends on - and the free FBA profit calculator shows ROI alongside net profit and margin.
Want to track this metric continuously?
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