Calculate return on investment for CNC machines, lathes, mills, and shop equipment with detailed financial analysis.
Analysis Scenario
Expected Case
Best Case (+20%)
Worst Case (-20%)
Machine & Investment Details
Low Utilization
75%
High Utilization
Operating Costs
Sensitivity Analysis
Adjust key variables to see how they affect your ROI:
-30%
0%
+30%
-20%
0%
+20%
ROI Analysis Results
Simple ROI
0%
Return on Investment
Payback Period
0 mos
Time to recover investment
Annualized ROI
0%
Yearly return rate
Net Present Value
$0
5-year NPV @ 8% discount
Internal Rate
0%
Internal Rate of Return
Monthly Profit
$0
After all costs
5-Year Cash Flow Projection
| Year | Revenue | Operating Costs | Net Cash Flow | Cumulative | ROI to Date |
|---|
Investment Recommendation
Based on your inputs, this machine investment shows positive ROI. Consider these factors before proceeding...
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Frequently Asked Quentions
1. What factors should I consider when calculating machine shop ROI?
Consider purchase price, installation costs, tooling, hourly rate, utilization percentage, operating costs (electricity, maintenance, labor), and revenue projections. Our calculator includes all these factors plus scenario analysis for comprehensive evaluation.
2. How accurate are machine shop ROI calculations?
Accuracy depends on input quality. Use historical data when available, industry benchmarks for assumptions, and consider multiple scenarios. Most shops achieve 80-90% accuracy with careful input estimation and regular review of actual vs projected performance.
3. What is a good ROI percentage for machine shop equipment?
Typically, 25-40% annual ROI is good, 40-60% is excellent, and 60%+ is outstanding. However, acceptable ROI varies by equipment type, shop size, and strategic importance. CNC machines often target 30-50% ROI with 18-36 month payback periods.
4. How do I calculate machine utilization rate for ROI analysis?
Utilization rate = (Actual productive hours / Available hours) × 100. Track machine hours for 2-4 weeks, subtract setup/maintenance time. Most successful shops operate at 70-85% utilization. Start with 75% if uncertain and adjust based on your shop's performance.
5. What's the difference between simple ROI and annualized ROI?
Simple ROI shows total return over the entire period. Annualized ROI converts this to an annual rate for easier comparison with other investments. For example, 100% ROI over 4 years equals 18.9% annualized ROI (compounded annually).
6. How important is NPV in machine shop investment decisions?
Very important. NPV accounts for the time value of money - $1 today is worth more than $1 in the future. Positive NPV indicates the investment will increase your shop's value after considering all costs and the timing of cash flows. Most banks require NPV analysis for equipment loans.
7. Can I use this calculator for used equipment purchases?
Yes, with adjustments. Used equipment typically has higher maintenance costs (3-6% of purchase price annually), shorter remaining lifespan, and potentially lower productivity. Adjust the maintenance cost input and consider a shorter analysis period (3-5 years instead of 5-7).
8. How do operator wages affect machine shop ROI?
Significantly. Operator costs often represent 30-50% of total operating expenses. Higher-skilled operators may command higher wages but often achieve better quality, less scrap, and higher productivity. Consider total cost including benefits, training, and potential overtime.
9. What maintenance costs should I include in ROI calculations?
Include preventive maintenance (scheduled services), corrective maintenance (repairs), consumables (cutting tools, coolant), calibration costs, software updates, and potential downtime costs. Most CNC machines require 2-4% of purchase price annually in maintenance.
10. How often should I review ROI calculations after purchasing equipment?
Review quarterly for the first year, then annually. Compare actual performance (hours run, revenue generated, costs incurred) with projections. Identify variances and adjust future calculations accordingly. This improves the accuracy of future investment decisions.
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