Calculate return on cost, total revenue, or total cost by entering any two values and solving for the missing one in dollars and percent.
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Return on Cost Formula
Return on cost measures profit as a percentage of total cost. The calculator uses this main formula:
ROC = ((TR - TC) / TC) * 100
- ROC = return on cost, expressed as a percentage
- TR = total revenue, in dollars
- TC = total cost, in dollars
If you leave total revenue blank, the calculator rearranges the formula as:
TR = (ROC / 100) * TC + TC
If you leave total cost blank, the calculator rearranges the formula as:
TC = TR / (1 + ROC / 100)
The calculator has three functions:
- Calculate return on cost: enter total revenue and total cost to find the percentage return.
- Calculate total revenue: enter total cost and return on cost to find the revenue needed to produce that return.
- Calculate total cost: enter total revenue and return on cost to find the cost level that matches that return.
Return on Cost Result Guide
The meaning of a return on cost result depends on the project, industry, and risk level. The table below gives a general way to read the percentage.
| Return on Cost | What It Means | Simple Example |
|---|---|---|
| Negative | Revenue is less than cost, so the project loses money. | $90 revenue on $100 cost = -10% |
| 0% | Revenue equals cost, so the project breaks even before other expenses. | $100 revenue on $100 cost = 0% |
| 10% to 25% | A positive return, often considered modest depending on risk. | $125 revenue on $100 cost = 25% |
| 50%+ | A high return relative to cost, but it should still be compared with risk and time involved. | $150 revenue on $100 cost = 50% |
Common Revenue Needed by Cost and Target Return
This table shows the total revenue needed to reach common target return on cost percentages.
| Total Cost | 10% ROC | 25% ROC | 50% ROC | 100% ROC |
|---|---|---|---|---|
| $1,000 | $1,100 | $1,250 | $1,500 | $2,000 |
| $10,000 | $11,000 | $12,500 | $15,000 | $20,000 |
| $100,000 | $110,000 | $125,000 | $150,000 | $200,000 |
Example Calculations
Example 1: Calculate return on cost
You have total revenue of $150,000 and total cost of $120,000.
ROC = ((150000 - 120000) / 120000) * 100
ROC = 25%
The return on cost is 25%.
Example 2: Calculate total revenue needed
You have total cost of $80,000 and want a return on cost of 30%.
TR = (30 / 100) * 80000 + 80000
TR = 104000
You need total revenue of $104,000 to reach a 30% return on cost.
FAQ
What is return on cost?
Return on cost is the profit earned above cost, divided by the cost, then converted to a percentage. For example, if a project costs $100,000 and produces $125,000 in revenue, the profit is $25,000. The return on cost is 25%.
Is return on cost the same as profit margin?
No. Return on cost compares profit to cost. Profit margin compares profit to revenue. For the same project, return on cost is usually higher than profit margin because the denominator is cost instead of revenue.
Can return on cost be negative?
Yes. Return on cost is negative when total revenue is lower than total cost. For example, if total revenue is $90,000 and total cost is $100,000, the return on cost is -10%.
