Your client’s product costs £50 to produce, and it sells for £150. She’s sold 10 units and spent £700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?

Your client’s product costs £50 to produce, and it sells for £150. She’s sold 10 units and spent £700 on her AdWords campaign. How would you calculate her return on investment (ROI) to help her understand the benefit of using AdWords?

1. [£1500 (revenue) – £1200 (cost + AdWords spend)] / £1200 (cost + AdWords spend) 
2. [£150 (sales price) – £1500 (cost)] / £700 (AdWords spend) 
3. £1500 (revenue) / £1200 (cost + AdWords spend) 
4. [£1500 (revenue) – 10 (number of products sold)] / £1200 (cost + AdWords spend)

For example, suppose Joe invested $10,000 in Google in 2016 and sold his shares for a total of $12,500 a year later. To calculate the return on his investment, he would divide his profits ($12,500 - $10,000 = $2,500) by the investment cost ($10,000), for a ROI of $2,500/$10,000, or 25%.