How to Calculate ROI & Payback
Return, annualised return and payback period for any investment or project.
How this number is built
Calculating it yourself
Step 1
Include every cost, not just the headline purchase price.
Step 2
Add ongoing costs across the full holding period.
Step 3
Use the actual holding period so the annualised figure is meaningful.
Step 4
Apply tax to gains, since after-tax return is what you keep.
Step 5
Compare the annualised number against your alternatives, not against zero.
What people ask next
Why annualise?
A 60% return over eight years is worse than 20% over one. Annualising puts every option on the same clock.
Should sunk costs count?
For a decision about the future, no. For measuring what happened, yes.
Searches this page answers
| Related search | Goes to |
|---|---|
| trading | ROI & Payback Calculator |
| how to calculate roi | ROI & Payback Calculator |
| how to calculate profit margin | ROI & Payback Calculator |
Tools that follow from this one
Break-Even Point Calculator
Units and revenue needed to cover fixed costs, plus margin of safety.
Business & TechCAC & LTV Calculator
Customer acquisition cost, lifetime value and the ratio investors ask about.
Business & TechHosting & Cloud Cost Calculator
Monthly infrastructure spend across compute, bandwidth, storage and support.
Business & TechAd Revenue & CPM Calculator
Model publisher revenue from pageviews, fill rate, CPM and click value.