What is ROI?
Return on Investment = (Net gain from investment − Cost of investment) ÷ Cost of investment × 100. An ROI of 50% means you earn back the cost plus half again.
How to run an ROI analysis
- List all costs: purchase, set-up, training, running costs.
- List all gains: extra revenue, cost savings, time saved (valued in money).
- Choose a time period (usually 1–3 years).
- Calculate ROI and the payback period (cost ÷ annual net gain).
- Test a pessimistic case as well as the expected case.
ROI example
A ₹6 lakh energy-monitoring system saves ₹3.6 lakh a year. Over two years: gain ₹7.2 lakh − cost ₹6 lakh = ₹1.2 lakh net → ROI 20%; payback in 20 months.
Common mistakes to avoid
- Counting gains but forgetting running costs.
- Comparing ROIs over different time periods.
- Never checking actual ROI after the investment.
How DOOfy helps
The hardest part of ROI is measuring the gain after the investment. AIMOS One tracks costs and savings before and after a change, so you can see the actual return — not just the one in the proposal.
Frequently asked questions
What is a good ROI?
It depends on risk, time and your cost of capital. Compare against alternatives and against what the money would earn elsewhere.
What is the difference between ROI and payback period?
ROI shows the size of the return; payback period shows how long it takes to get your money back.