When evaluating a document conversion project, or any other investment for that matter, it is important to understand how to calculate your potential return on investment. ROI calculations are used to evaluate the overall efficiency of your investments and can be used to compare several investment opportunities to identify your best options.
What is ROI?
At its core, ROI calculation is very simple. Essentially, ROI can be calculated by dividing your return by the initial cost.
ROI= Gain – Cost / Cost of investment
While ROI tends to be a popular metric due to its simplicity, there is more to be said about calculating ROI. ROI calculations are also extremely versatile as they can be modified to suit any unique situation. Modifications can be made simply by changing your cost variables. Because ROI is a tool to measure profitability, there is essentially no right or wrong way to evaluate you investment costs.
The Downside to ROI:
While flexibility can be seen as an upside to ROI calculation, it can also pose some issues. Due to its flexible nature, ROI calculations can be manipulated to benefit the intentions of its creator. In order to ensure that your ROI calculations are reporting helpful data, you must understand all of the input criteria being evaluated.
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