Payback Period Calculator

Investment

Income a month

Costs a month

Monthly profit growth, %

Result

Pays back in, months12
That is, years1
Net profit a month$50,000.00
Without growth, months12
Profit for a year$600,000.00
Annual return, %100%

Investment divided by monthly profit

How many months an investment takes to return, allowing for profit that grows over time.

Payback period is the plainest way to judge a venture: how many months until the money comes back. It is the investment divided by net monthly profit — income less costs.

If profit grows, a plain division overstates the period. So the calculation runs month by month, compounding the growth rate and comparing the running total against the investment.

What this calculator shows

Payback in months and in years
The same period without growth, for comparison
Net monthly profit, annual profit and the annual return on the investment

What to keep in mind

Future money is not discounted: a rouble in three years counts the same as one today. Over long projects that flatters the result noticeably.
If profit does not cover costs, the calculator says the project will not pay back rather than returning an enormous number.

FAQs

What payback period is good?

A year to eighteen months for a small business, two to three years for equipment, seven to ten for property. The longer the period, the more risk has time to materialise.

Why is inflation not included?

This is simple, undiscounted payback. For projects beyond two or three years, discounted payback — where future money is brought back to today's value — is the correct measure.

What counts as the investment?

Everything spent before the venture turns a profit: equipment, fit-out, first stock, legal costs and working capital for the early months. Forgotten working capital is the usual reason real payback runs longer than planned.

Profit before or after tax?

After. Payback computed on pre-tax profit is systematically optimistic; a simplified-regime turnover tax alone shifts the period noticeably.

Worked example

A small outlet

Input: 600,000 invested, 150,000 income and 100,000 costs a month

Output: Pays back in 12 months, a 100 percent annual return

Note: Exactly a year is a good result for a small business. Add two percent monthly profit growth and it shortens to eleven months — over three years that difference becomes decisive.

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Payback Period Calculator

Result

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