ROI Calculator Excel
Calculate return on investment for any project. Get ROI percentage and payback period instantly.
How the ROI Calculator Excel works
Enter your investment cost and expected returns. Get ROI, payback period, and profit calculations automatically.
Before committing money to any project, you need to know if it will pay off. This calculator shows if your investment makes financial sense.
How it works
Tutorial
ROI (Return on Investment) measures how much profit you make compared to what you invested. A positive ROI means you made money, while negative ROI means you lost money. Most businesses look for ROI of at least 15-20% to justify investments.
Use the calculator above for instant results, or follow this guide to calculate ROI manually.
The Formula
| Metric | Formula |
|---|---|
| Total Investment | Initial Cost + Ongoing Costs |
| Total Return | Revenue + Savings + Other Benefits |
| Net Profit | Total Return – Total Investment |
| ROI Percentage | (Net Profit ÷ Total Investment) × 100 |
| Payback Period | Total Investment ÷ Annual Return (in years) |
Step-by-Step Example
Let’s calculate ROI for a business software purchase.
Step 1: Calculate Total Investment
| Cost Item | Amount |
|---|---|
| Software License (annual) | $12,000 |
| Implementation & Setup | $8,500 |
| Training (3 employees) | $4,200 |
| First Year Maintenance | $2,400 |
| Total Investment (Year 1) | $27,100 |
Calculation:$12,000 + $8,500 + $4,200 + $2,400 =$27,100
Step 2: Calculate Annual Returns
| Benefit | Annual Value |
|---|---|
| Time Savings (300 hrs × $65/hr) | $19,500 |
| Reduced Errors/Rework | $8,200 |
| Increased Sales (better tracking) | $15,000 |
| Lower Operating Costs | $3,800 |
| Total Annual Return | $46,500 |
Calculation:$19,500 + $8,200 + $15,000 + $3,800 =$46,500
Step 3: Calculate Net Profit (Year 1)
| Component | Amount |
|---|---|
| Total Annual Return | $46,500 |
| Total Investment | -$27,100 |
| Net Profit (Year 1) | $19,400 |
Calculation:$46,500 – $27,100 =$19,400
Step 4: Calculate ROI Percentage
| Component | Value |
|---|---|
| Net Profit | $19,400 |
| Total Investment | ÷ $27,100 |
| ROI Decimal | 0.716 |
| ROI Percentage | 71.6% |
Calculation:($19,400 ÷ $27,100) × 100 =71.6%
Step 5: Calculate Payback Period
| Component | Value |
|---|---|
| Total Investment | $27,100 |
| Annual Return | ÷ $46,500 |
| Payback Period | 0.58 years (7 months) |
Calculation:$27,100 ÷ $46,500 =0.58 years(about 7 months)
Step 6: Project 3-Year Value
| Year | Investment | Return | Net Profit | Cumulative |
|---|---|---|---|---|
| Year 1 | $27,100 | $46,500 | $19,400 | $19,400 |
| Year 2 | $14,400 | $46,500 | $32,100 | $51,500 |
| Year 3 | $14,400 | $46,500 | $32,100 | $83,600 |
| Total | $55,900 | $139,500 | $83,600 | $83,600 |
Note:Years 2-3 only include license and maintenance ($12,000 + $2,400 = $14,400), not one-time setup costs.
Bottom Line:First-year ROI is71.6%with a7-month payback period. Over 3 years, the investment generates$83,600 in profit.
What This Means
An ROI of 71.6% in the first year is excellent – well above the typical 15-20% threshold for business investments. The 7-month payback period means you recover your investment quickly, and then continue generating $46,500 in annual benefits. Over multiple years, the ROI improves further since setup costs are one-time. Always base ROI calculations on realistic, measurable benefits – avoid inflated estimates that make poor investments look good on paper.
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