Tip of the Week: How to Calculate the ROI of Anything

All businesses are part of their respective markets, and depending on that market, the business will implement technology solutions designed to help them best cater to their business. However, you should only implement technology that can yield a satisfactory return on investment, or ROI. We’re here to help you get the most return on your investment as possible.

Return on investment is basically a way of saying that whatever you’re investing in is actually creating results for your organization. It’s the difference between spending a considerable amount of time on a task with an expensive technology or spending even longer without one. It’s working smarter, not harder. It all comes down to calculating whether the investment you’ve made on a technology solution generates enough revenue to justify making the investment it in the first place.

Here’s how you too can calculate the return on investment for just about any technology solution your business might consider down the line.

Basic Return on Investment
At its most basic level, return on investment boils down to the following equation:

ROI = ((Net Gain) / Cost) * 100

Net gain is determined by a couple of factors, including how much you spend and how much you wind up with afterward. Therefore, if you spend $20 and make $40, your net gain would be $20.

ROI = (20/20) * 100 = 100%

This places the ROI at a 100%, effectively doubling the amount of money you’ve invested.

Net Gain and Costs Aren’t Always Easy to Determine
Of course, net gain for businesses isn’t always going to be this easy to figure out. You have all kinds of operating costs, implementation costs, payroll, opportunity cost, and so on, all of which can directly influence how much return on investment you will get from a particular solution. If you are thinking about implementing a new piece of technology, you’ll have to think about how much time is spent on a task now, how much time could be saved, and what the initial cost of implementation will be.

This might be overwhelming to some, but it’s not impossible to figure out. After all, you have the technology experts at Directive to rely on. For help determining if your next IT implementation will yield a positive return on investment, reach out to us at 607.433.2200.