ROI Calculator
Find out how long something takes to pay for itself, and what it returns over the first year. Enter what it costs and what it saves each month.
ROI Calculator
Payback period
Pays for itself within the first year
6.6 months
Updates as you type — nothing is sent anywhere.
Payback period and ROI are different questions
Payback period answers 'when do I get my money back' — cost divided by monthly saving, expressed in months. ROI answers 'how much did I make' — net gain divided by cost, expressed as a percentage. A short payback with a small return and a long payback with a large one are both possible, so the two figures are worth reading together.
How to work out the monthly saving
Count only what genuinely changes. If a purchase replaces a subscription, the saving is the subscription cost. If it saves labour, the saving is the hours removed multiplied by a loaded hourly rate, and only if those hours are actually redeployed. If it increases revenue, use the additional margin rather than the additional revenue, or the figure will flatter the result badly.
What this simple model leaves out
It ignores the time value of money, ongoing running costs, and any decline in the saving over time. For short paybacks measured in months that rarely changes the decision. For multi-year cases, a discounted cash flow gives a truer picture, and ongoing costs should be netted off the monthly saving before you enter it here.
Using ROI as a sales argument
For considered purchases, showing a shopper that a product pays for itself within a known period reframes the price as an investment rather than a cost. It works best where the saving is concrete and verifiable — energy use, consumables replaced, a subscription cancelled — and badly where the benefit is subjective.
Frequently asked questions
What is the payback period formula?
Initial cost divided by the saving per period. With a $299 cost and a $45 monthly saving, the payback period is about 6.6 months.
What counts as a good ROI?
It depends entirely on the alternative use of the money and the risk. As a rough guide for a business purchase, a payback under 12 months is usually easy to justify.
Does this account for inflation or interest?
No. It is a simple undiscounted model. For multi-year investments, a discounted cash flow analysis gives a more accurate answer.
Should I use revenue or profit as the monthly saving?
Profit, or the additional margin. Using revenue ignores the cost of producing it and will overstate the return substantially.