ChoiceRidge Software ROI Methodology
The calculator uses deterministic formulas and only the values you enter. Total cost includes recurring subscription charges and one-time implementation, migration, training, and other costs. Total benefit can include direct savings, employee capacity, attributed gross-profit contribution, and avoided costs. Results do not use a vendor-price database or generative AI.
ROI equals net benefit divided by total cost. A benefit-cost ratio shows the modeled benefit generated for each unit of cost. When total cost is zero, the ROI percentage is not applicable because division by zero is undefined.
Economic ROI and Cash-Oriented ROI
Economic ROI includes the full entered value of productive employee capacity. Cash-Oriented ROI includes only the percentage of productivity you expect to convert into measurable financial impact, along with direct savings, attributed revenue contribution, and avoided cash costs. Showing both views prevents capacity from being presented as guaranteed cash savings.
Payback and Timing
Payback is calculated month by month. The model respects one-time costs, implementation delays, adoption ramps, recurring charges, and annual cost or benefit changes. This is more accurate than dividing upfront cost by a single monthly benefit when cash flows are uneven.
Break-Even Requirements
The “What Would Need to Be True?” section translates recurring software cost into independent equivalent paths: employee hours saved, attributed revenue, orders, customers, or direct savings. These paths are alternatives and may be combined; the calculator does not imply that every requirement must be achieved simultaneously.
Assumptions and Evidence
Each benefit can be labeled Measured, Estimated, or Assumed. These labels do not change the arithmetic. They show how much modeled value depends on each evidence level. High-impact assumed benefits deserve validation before a purchase decision.
Long-Term Analysis and NPV
One-time costs occur at the beginning while recurring costs and benefits continue through the selected horizon. Annual changes compound after each 12-month period. Optional Net Present Value discounts future monthly net value using the annual discount rate you enter.
Calculator Privacy
Software names, costs, employee values, revenue, margins, assumptions, candidates, and results are calculated and stored locally in your browser. This tool does not submit that detailed business-case data to ChoiceRidge.
Frequently Asked Questions
What is software ROI?
Software ROI compares modeled net benefit with total software-related cost over a defined period.
Is employee time automatically a cash saving?
No. Economic ROI values productive capacity; Cash-Oriented ROI applies your capture percentage to show the portion expected to translate more directly into financial impact.
How is payback calculated?
The calculator follows cumulative monthly costs and benefits and identifies when cumulative benefit first recovers cumulative cost.
Are the results guaranteed?
No. Results are scenarios based on your inputs, evidence quality, adoption, attribution, and financial assumptions.
Can I compare products?
Yes. Save up to three candidates locally and compare cost, ROI, payback, and net benefit without an automatic winner.
Is my business-case data sent to ChoiceRidge?
No. Detailed calculator inputs and results remain in your browser.