INVESTMENT COST & BENEFIT

Return on Investment (ROI)

Also called

Abbreviation
ROI
Reading time
3 minutes

Return on investment compares an investment’s defined net benefit or gain with its cost. A simple project ROI commonly expresses net gain divided by investment cost as a percentage over a stated horizon.

RETURN ON INVESTMENT IN PRACTICE

  1. Define the caseState cost, benefits and evaluation period.
  2. Calculate consistentlyUse the agreed net-gain and cost definitions.
  3. Test the assumptionsReview timing, uncertainty and alternatives.

Use the agreed units, actual records and approved procedures for your operation.

A WORKED EXAMPLE

A simple 20% return needs its period stated.

An illustrative project costs $10,000 and delivers $12,000 of benefits over the stated evaluation period, with all relevant costs included in the example. Net gain is $2,000 and simple ROI is 20%; it is not automatically a yearly return.

WHAT THIS MEANS FOR YOUR QUOTE

Agree the requirement before comparing quotes

Use the actual shipment, stock and service requirements. Record the billing unit, included work and responsibility for exceptions.

A LITTLE MORE CONTEXT

Questions about Return on Investment

Is simple ROI always annualized?

No.

Are gross savings identical to net gain?

No.

Does a forecast ROI guarantee results?

No.

Source & example notes

US DOE: simple ROI and wider investment measures.

Sources provide background on the linked topic. Product documentation describes a particular implementation; confirm the rules, contract and procedures that apply to your operation.

Quantities, costs and scenarios are illustrative, not operating targets, approved handling instructions or guarantees. Source guidance reviewed 23 October 2026.

Last updated: · 3PL Hub

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