ROI Model

An ROI (Return on Investment) Model is a tool used to measure the profitability of an investment by comparing the gains or benefits it generates to the costs involved. It helps organizations evaluate whether a project or expenditure is financially worthwhile. The basic idea is to calculate the net profit (benefits minus costs) and divide it by the costs, often expressed as a percentage. A higher ROI indicates more beneficial investments. This model assists in making informed decisions, prioritizing projects, and ensuring resources are used efficiently to maximize returns.