Consulting ROI calculator
Check whether a consulting project pays off before you sign, measure what it really delivered after it ends, or price your own proposal on the value you create. ROI, payback, NPV and IRR. Free, no sign-up, nothing leaves your browser.
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The method
How consulting ROI is calculated
ROI compares what the project returns with everything it costs.
The benefit is the extra profit and the savings the project brings, reduced by your confidence, and counted over the years you choose. The calculator works month by month: benefits grow evenly until the month results are fully in place, so a slow start lowers the first year.
Next to ROI you get the benefit-cost ratio (benefit ÷ cost), the payback period, net present value and the internal rate of return.
$100,000 a year
$200,000 × 30% + $40,000 = $100,000
At 80% confidence, $80,000 a year counts.
$223,333 in total
6-month ramp-up: $63,333 in year 1
Then $80,000 in each of years 2 and 3.
197.8% ROI
($223,333 − $75,000) ÷ $75,000
Payback in 13.8 months. NPV $116,548 at 10%.
Common mistake
Revenue is not profit
Extra sales come with extra costs, so only the profit on them is a return.
If a project adds $200,000 of sales at a 30% margin, the business is $60,000 better off, not $200,000. Counting revenue instead of profit makes the ROI in this example look three times better than it is. Enter your gross or contribution margin, and enter cost savings separately, because a saving is already profit.
Full cost
What counts as the cost of a consulting project
The fee is only part of it.
Consulting fees
Including travel, expenses and any planned extensions of the engagement.
Internal time
Hours your managers and staff spend in workshops, interviews and rollout, at their loaded cost.
Running costs
New software, retainers or extra staff the recommendations require. Enter them as an ongoing cost per year.
Credible results
How much of the result came from the consultant?
Sales and costs change for many reasons. The After the project tab only credits the share the consulting work caused.
This is the estimation method Jack Phillips describes for training and other programs: people closest to the results estimate what share of the improvement the program caused and how confident they are in that estimate, and the two percentages are multiplied. If they say 50% with 70% confidence, 35% of the improvement is credited.
In the example, a $250,000 improvement becomes $87,500 of credited benefit. Against $75,000 of cost, the ROI is 16.7%, not the 233% you would get by crediting everything.
Time value
NPV, IRR and payback
Money you receive later is worth less than money you pay now.
Value in today's money
Each month's benefit is discounted at your rate and the costs are subtracted. Above zero means the project beats your cost of capital.
The project's own return rate
The yearly rate at which NPV is exactly zero. Compare it with the return you expect from other uses of the money.
Months to break even
When the benefits received so far cover the upfront cost. A slow ramp-up moves it later.
For consultants
Value-based fees
Price the project on the value it creates for the client, not on your hours.
Consultant Alan Weiss argues that a fee should give the buyer at least a 10 to 1 return. If your work is worth $500,000 a year to the client, a $50,000 fee gives them that return. With 120 hours of work, your effective rate is about $417 an hour.
The Price my proposal tab shows fees at 5, 10 and 20 to 1, so you can offer options and see what each means for your hourly rate.
Spreadsheets
Consulting ROI formulas for Excel and Google Sheets
A1 = total benefit, B1 = total cost.
ROI
Benefit-cost ratio
Credited benefit (C1 = improvement, D1 = share caused, E1 = confidence)
NPV and IRR of yearly cash flows in F1:F4 (F1 = upfront cost as a negative number)
FAQ
Consulting ROI questions
How do you calculate the ROI of a consulting project?
Subtract the total cost from the total benefit, divide by the total cost and multiply by 100. Count profit, not revenue, include your internal time in the cost, and only credit the share of the result the consulting work caused.
What is a good ROI for consulting?
There is no single standard. Any ROI above 0% returns more than it costs, and an NPV above zero means the project beats your cost of capital. Many consultants who price on value aim for the client to get several times the fee back; Alan Weiss recommends at least 10 to 1.
Should I use revenue or profit?
Profit. Extra revenue brings extra costs, so multiply new revenue by your margin. Cost savings are already profit and count in full.
How do I know how much of the result came from the consultant?
Ask the people closest to the results to estimate the share the project caused and how confident they are, then multiply the two percentages. Use control groups or trend data when you have them.
When should I measure the results?
Six to twelve months after the project ends, once changes are in place. Results on the last day of a project usually show plans, not outcomes.
What is the difference between ROI and the benefit-cost ratio?
ROI shows net gain as a percentage of cost. The benefit-cost ratio divides total benefit by cost. A ratio of 3 equals an ROI of 200%.
How do I price a consulting project on value?
Estimate the yearly value your work creates for the client, decide how many years to count and divide by the return you want the client to get for each dollar of fee. Then check the effective hourly rate against your effort.
Does the calculator store my data?
No. Everything runs in your browser. The share link keeps your numbers in the address after the # sign, which is not sent to our server.
References
Sources
- Estimating the share of results caused by a program, adjusted for confidence: Jack J. Phillips, "Was It the Training?", Training & Development, 1996
- ROI and benefit-cost ratio formulas: ROI Institute
- Value-based fees and the 10 to 1 return: Alan Weiss, Million Dollar Consulting
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