ROI – Return on Investment

Definition updated on November 2023

How is ROI (Return on Investment) calculated and used to evaluate business performance?

Return on Investment (ROI) is a financial metric that's widely used to measure the likelihood of gaining a return from an investment. It compares the profit from an investment to its initial cost. In the sneaker resell world, ROI evaluates the effectiveness of an investment in sneakers for reselling purposes. To calculate ROI, you subtract the original cost of the sneaker (and any associated costs like shipping or fees) from the net profit you made after selling it, then divide this by the original cost. The result is then multiplied by 100 to get a percentage. For example, if a reseller bought a pair of sneakers for $100 and sold them for $150, the ROI would be 50%. This means for every dollar spent, there was a return of $1.50. Resellers use ROI to determine which sneaker releases or purchases are most profitable. It's crucial for determining the success of a particular investment or comparing the effectiveness of different investments. In simpler terms, ROI tells a sneaker reseller how much money they made compared to how much they spent. A high ROI indicates the investment gains compare favorably to its cost, making it a sought-after metric in the reselling business.

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