Calculating a ROI, in theory, isn’t that complicated of a calculation. It is basically taking the gain of an investment, subtracting the cost of the investment, then dividing the total by the cost of the investment.
For example, if you buy 10 shares of Natalie’s Pizzeria at $10 a share, your investment cost would be $100. Then if you sell those shares for $125, your ROI is ($125-$100)/$100 for a total of 0.25 or 25%.
While it seems strait forward, since an ROI calculation is the same for every type of investment—from a real estate investment to a stock investment to a rare stamp collection—a ROI is actually difficult to project, and can have many variables.
For property owners, repair and maintenance expenses are a few variables that come into play and affect ROI numbers. When purchasing a property, financing terms also can have a great impact. If you throw in a second mortgage or a refinancing, things can get even more complex.
But there are tools that can help companies save at least 10% of their annual maintenance budgets and therefore will help their bottom line.
A CMMS system, like Common Areas for example, will help track expenses and will help to compare those expenses against your budget. It can log parts, labor and other expenses and overall, it will become a centralized space for all maintenance related expenses.
Not only that, but when you can better track expenses, you can increase an asset’s life. When money isn’t constantly flowing to overtime costs and equipment breakdowns, it can be redirected into other areas.
So, while some say that they need to justify the cost of CMMS, those who have used it say that having a CMMS makes calculating ROI straightforward and more simplified.
Click here to learn more about Common Areas and how it can help your company’s ROI calculation.