Calculate your Return on Investment for Engineering Projects
Understanding engineering economics doesn’t have to be complicated. We’ve added quick tips and friendly explanations to help you make sense of your Return on Investment (ROI) and how it compares to other financial metrics like NPV and IRR.
ROI, or Return on Investment, is a simple way to measure how much value you’re getting from a project or purchase. Whether you’re investing in a new 3D printer, solar panels for your facility, or a software upgrade, ROI helps you ask the big question:
“Is it worth it?” 🤔
Here’s the basic formula:
ROI (%) = [(Gain from Investment – Cost of Investment) / Cost of Investment] × 100
In plain English:
👉 If you spend $1,000 and get back $1,500 in benefits, your ROI is 50%.
That means for every $1 you spent, you earned $1.50. Not bad, right?
While ROI is a great starting point, it doesn’t tell the whole story—especially when you're thinking long term. Here's how the others compare:
NPV helps you factor in time and the value of money. It answers:
“How much is this investment worth today, considering future cash flows?”
If the NPV is positive, your investment is likely worth it.
👉 Try our handy NPV Calculator to see how time changes everything!
It’s the interest rate where your project breaks even—meaning your gains match your costs over time.
“What’s the annual rate of return that makes this investment make sense?”
If your IRR is higher than your expected return (like a bank loan rate), that’s a green light! ✅
👉 Curious? Use our IRR Calculator and explore your options.
We recommend starting with ROI to get the big picture—and then diving into NPV or IRR when you're comparing projects in time and complex decisions.
