Free tool
ROI and payback period calculator
Thinking about equipment, software or a vehicle? Enter the cost, the yearly benefit and how long you will use it. See the return and how long it takes to pay for itself.
Prefer to talk it through? Take the free books check or contact us.
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How it works
How it works
ROI is the total return minus the cost, divided by the cost. Payback is the cost divided by the yearly benefit. The annualized return spreads the gain over the years you use the item.
Annual benefit means extra profit or savings, not extra sales. This simple version ignores taxes, financing and the time value of money.
FAQ
About this calculator
How do you calculate ROI?
Subtract the cost from the total return, then divide by the cost. A $10,000 purchase that returns $12,000 over its life has an ROI of 20%.
What is the payback period?
The time it takes for the yearly benefit to add up to the cost. A $10,000 purchase that adds $4,000 a year pays back in 2.5 years.
What should I enter as the annual benefit?
Extra profit or savings the purchase causes each year, not extra sales. Subtract any added running costs.
What does this leave out?
Taxes, financing costs and the time value of money. A dollar next year is worth less than a dollar today, so treat the answer as a rough screen.
What is the salvage value?
What you could sell the item for at the end of the period. Leave it at 0 if you expect nothing.
Is anything saved?
No. The math runs in your browser and nothing you enter is sent to us.
See a worked example in how to calculate ROI on a business purchase, spread the cost with the depreciation calculator, or find your break-even point. More free tools: Debt-to-equity ratio calculator, Receivables turnover calculator, Operating margin calculator, or see all free tools.
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General information, not tax or legal advice. How we write and check our tools.