ROI Estimation Strategy

We can NOW build a scenario-based ROI model. See next section for details

ROI Estimation Example:

*Amounts shown are EXAMPLE ONLY and are not indicative of our prices*

Investment Estimate Cost: $250,000

Scenario:

Extra Contracts Won: $50,000

Efficiency Gains: $30,000

Downtime Reduction: $20,000

Safety Cost Savings: $25,000

Total: 50,000 + 30,000, + 20,000 + 25000

= Total Annual Value: $125,000

To calculate Return on Investment (ROI), we use the following formula:

📌 ROI Formula:

ROI (%) = ((Total Annual Value - Investment Cost) / Investment Cost) × 100

📌 Payback Period Formula:

Payback Period (years) = Investment Cost / Total Annual Value

📌 Example:

• Investment Cost = $250,000

• Total Annual Value = $125,000

• ROI (%) = (($125,000 - $250,000) / $250,000) × 100 = -50%

• Payback Period = $250,000 / $125,000 = 2 years

Time frame for Return

Using these numbers and calculating based on the above formula, it would take just 2 years from time of purchase .