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Sales ROI calculator: return and payback for a software purchase
Enter what the problem costs each month, the hours the purchase would save, what an hour of that time costs, the yearly price and the term. You get the return over the term, how many months it takes to pay for itself, and the net after each of the first three years. It runs in your browser and nothing is saved.
- Monthly savings are the cost of the problem removed plus hours saved times the hourly cost of that time.
- Payback in months is one year's price divided by monthly savings, and it is the easiest figure to defend.
- One-time costs, discounting, tax, depreciation, ramp-up time and renewal price changes are left out on purpose.
- Use salary plus overhead for hourly cost, and ask the people doing the work how many hours it saves.
- Run it at 1, 2 and 3 years with each term's price to compare options.
Example: change any number
Return over the term
470%
Pays for itself in
2.1 months
Net after 3 years
$84,600
| Time saved | 30 hrs × $45 = $1,350/mo |
|---|---|
| Problem cost removed | $1,500/mo |
| Total savings | $2,850/mo · $34,200/yr |
| Cost | $6,000/yr · $18,000 over 3 years |
| Net after year 1 | $28,200 |
| Net after year 2 | $56,400 |
| Net after year 3 | $84,600 |
Worked out in your browser. Nothing you enter is sent or saved.
A sales ROI calculator is only useful if an approver believes the inputs. This one keeps it plain: savings from the problem you remove, savings from time you get back, and the price. Every formula is below, so you can check the result by hand and explain it in a meeting. If you're building a full case for a purchase, the business case template shows where these numbers fit.
The formulas
- Time savings per month = hours saved per month × hourly cost of that time
- Monthly savings = monthly cost of the problem it removes + time savings per month
- Annual savings = monthly savings × 12
- Cost over the term = price per year × term in years
- Return over the term = (annual savings × term − cost over the term) ÷ cost over the term
- Payback in months = one year's price ÷ monthly savings
- Net after year N = annual savings × N − price per year × N
The calculator always shows the net for years 1, 2 and 3, whatever term you pick, so you can see where a one-year deal would stand if you kept renewing. If the price is zero, return shows "n/a". If savings are zero, payback shows "Never".
A worked example
A made-up example, with numbers chosen to be easy to follow: a 6-person bookkeeping firm looking at software that would cut $500 a month of rework and save 20 hours a month of staff time worth $40 an hour. The software costs $4,800 a year, on a 2-year term.
| Step | Working | Result |
|---|---|---|
| Time savings | 20 hours × $40 | $800 a month |
| Monthly savings | $500 + $800 | $1,300 a month |
| Annual savings | $1,300 × 12 | $15,600 a year |
| Cost over the term | $4,800 × 2 | $9,600 |
| Return over the term | ($15,600 × 2 − $9,600) ÷ $9,600 | 225% |
| Payback | $4,800 ÷ $1,300 | 3.7 months |
| Net after year 1 | $15,600 − $4,800 | $10,800 |
| Net after year 3 | $15,600 × 3 − $4,800 × 3 | $32,400 |
The return looks big because the inputs are generous. That's the usual problem with ROI figures, and why the inputs deserve more of your time than the result.
Getting the inputs right
- Monthly cost of the problem it removes. Only count what the purchase actually takes away: rework, lost deals, a tool you'd cancel. If it only reduces a problem, count the share it removes, not the whole cost.
- Hours saved per month. Add it up across everyone who'd use it. Ask the people doing the work, not their manager.
- Hourly cost. Salary plus overhead, per hour. Don't use a billing rate unless those hours would really be billed.
- Price per year. What you'd pay for the term you picked. If longer terms are cheaper per year, run each one.
What it leaves out, on purpose
- One-time costs like setup or data import. The Business Case Builder includes them.
- Discounting, tax and depreciation. If finance wants a net present value, give them these figures as inputs.
- Ramp-up time. Savings rarely start in month one. If adoption will take a quarter, lower the hours saved.
- Price changes at renewal. The net for years 2 and 3 assumes the same yearly price.
How to use the result
Put the payback figure first. It's the easiest number to defend, and it answers "how long until this stops costing us money?" Then show the return over the term, and the net after year 3 if the approver thinks in longer horizons.
Comparing terms is where this calculator earns its place. Run it at 1, 2 and 3 years with the price for each. If you're the seller laying out those options in a proposal, our guide on how to present pricing in a proposal covers how to show them.
To turn the result into something an approver can sign off, add the problems in the buyer's words and the one-time costs with the Business Case Builder, or follow how to write a business case. In AfterDemo, the same return and payback maths sits inside every proposal as the buyer's business case. Try it as a buyer in the live example.
Questions people ask
What's the difference between ROI and payback?
Return tells you how much you get back over the whole term compared with what you spend. Payback tells you how many months of savings it takes to cover one year's price. Approvers at small companies often care more about payback.
Why doesn't it include a one-time setup cost?
This calculator keeps to running costs. If there's setup, onboarding or data import to pay for, use the free Business Case Builder, which adds a one-time cost to year one.
Is anything I enter saved?
No. The calculation happens in your browser. Nothing is sent to us or stored.
Can sellers use it with buyers?
Yes. Work through it together on a call, using the buyer's own numbers for time and cost. A return built from their estimates carries more weight than one built from yours.
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