ROI & Payback Period Calculator
Calculate return on investment, annualised return and how long an investment takes to pay for itself.
Formula
ROI = (gain − cost) / cost · annualised = (1 + ROI)^(1/years) − 1
Tips
- Always compare the annualised figure, not the headline ROI. A 60% return over five years is worse than 30% over two.
- Simple ROI ignores the timing of cash flows. For anything longer than a year, NPV and IRR give a more honest picture.
- Payback period says nothing about what happens after payback, so it favours short projects over more valuable long ones.
Frequently asked questions
Should ROI include my own time?
For a business case, yes. Excluding founder or staff time makes projects look far better than they are, and it is the most common way an internal ROI figure ends up misleading.