HR Software ROI Calculator – Measure Your Investment Success

When you invest in HR software, understanding your return on investment (ROI) is crucial. Our HR Software ROI Calculator helps you quickly determine whether your software investment is financially beneficial by comparing the cost of investment with the expected benefits.

Formula for HR Software ROI

ROI Formula

The formula used to calculate ROI is:

$\text{ROI (\%)}=\left(\frac{\text{Benefit of Investment}-\text{Cost of Investment}}{\text{Cost of Investment}}\right)\times 100$

Payback Period Formula

To calculate the number of months it will take to recover the investment:

$\text{Payback Period}=\frac{\text{Cost of Investment}}{\text{Benefit of Investment}÷12}$

Annual Net Gain

This is simply the difference between the benefit and the cost:

$\text{Annual Net Gain}=\text{Benefit of Investment}-\text{Cost of Investment}$

Multi-Year Projections

For longer-term planning, you might want to evaluate how much gain you will make over multiple years:

$\text{Net Gain Over 3 Years}=(3\times \text{Benefit})-\text{Cost}$

$\text{Net Gain Over 5 Years}=(5\times \text{Benefit})-\text{Cost}$

ROI Rating

Based on ROI %, your investment is rated as:

• Exceptional: ROI > 300%
• Excellent: ROI > 150%
• Good: ROI > 50%
• Marginal: ROI > 0%
• Poor: ROI ≤ 0%

Example

Let’s say:

• Cost of Investment = $5,000
• Benefit of Investment = $15,000

Step 1: ROI

$\text{ROI}=\left(\frac{15000-5000}{5000}\right)\times 100=200\%$

Step 2: Payback Period

$\text{Monthly Benefit}=\frac{15000}{12}=1250$

$\text{Payback Period}=\frac{5000}{1250}=4$

Step 3: Annual Net Gain

$\text{Annual Net Gain}=15000-5000=10000$

Step 4: Multi-Year Gains

$\text{3-Year Gain}=(3\times 15000)-5000=40000$

$\text{5-Year Gain}=(5\times 15000)-5000=70000$

Final Words

Use this calculator before buying any HR software. With just two numbers, you can understand if the investment will pay off — and how fast.