In 30 seconds
- ROI = (gain − cost) / cost.
- Agile delivers value early, so ROI can start before the project ends.
- Forecasts are uncertain; revisit them as you learn.
The formula
ROI = (gain from investment − cost of investment) / cost of investment x 100
A feature costing 100,000 that returns 150,000 has an ROI of 50%.
How agile helps ROI
Delivering valuable slices early, such as MMFs, starts the return sooner. Stopping work whose value has dropped avoids sunk costs. Ordering by cost of delay maximizes value over time.
Using it for decisions
- Estimate ranges, not single numbers
- Compare options, not just individual items
- Revisit after release with real data
- Include costs of maintaining what you build
Myth vs reality
Myth · ROI needs precise numbers.
Reality · Rough ranges are enough to compare options.
Myth · Only revenue counts as return.
Reality · Cost savings and risk reduction count too.
Myth · ROI is calculated once, up front.
Reality · Update it as you learn.
FAQ
Who should estimate ROI?
Product management with finance, informed by the team.
How does ROI relate to cost of delay?
Cost of delay adds timing: value lost by waiting.
Can ROI justify technical work?
Yes, by estimating time saved or incidents avoided.