Payback calculator

When does it pay off

See how long a one-off cost, such as a heat pump, a new appliance or a switch to another plan, takes to pay for itself through lower running costs, and what you gain or lose over the years you choose.

New to this? See how it works ↓

Your numbers · replace with your own

Optional

Your result

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Saving per month
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Saving in the first year
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Net benefit over the period
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An illustration based on the numbers you entered, not a forecast and not advice.

Assumptions & limits

  • Savings are counted at today's prices unless you enter a yearly cost increase; the same increase is applied to both the old and the new cost.
  • The upfront cost is treated as paid in full today; financing interest isn't included.
  • Maintenance, repairs and changes in usage are included only if you fold them into the recurring costs.

How it works

Paying now to pay less later

Many purchases cost more up front and less to run: a heat pump, an efficient appliance, a cheaper plan with a setup fee. The question is when the lower running cost has paid back the extra you spent. Enter what you pay up front, any rebate, what you pay today and what you would pay after the change.

The calculator works out the saving in the first year, then adds up the saving year after year. Payback is the first year in which the running total reaches the net upfront cost, with that last year split into months. If you expect costs to rise, a yearly increase is applied to both the current and the new cost, so the gap between them grows. A resale value at the end of the period is added to the benefit.

The result is shown as a payback time, a net benefit over the period you chose and a year-by-year table, so you can see how far short or ahead you are at every point. It does not include financing interest, repairs or changes in how much you use the item unless you fold them into the recurring costs. Nothing you enter is stored or sent anywhere.

Formula

net_cost       = upfront cost − rebate
k              = billing periods per year (weekly 52, monthly 12, quarterly 4, yearly 1)
saving_year_1  = (current − new) × k
saving_year_t  = saving_year_1 × (1 + growth)^(t − 1)
cumulative(t)  = saving_year_1 + … + saving_year_t

payback        = first year T where cumulative(T) ≥ net_cost
                 payback_years = (T − 1) + (net_cost − cumulative(T − 1)) ÷ saving_year_T
                 with no growth: net_cost ÷ saving_year_1

net_benefit    = cumulative(years) − net_cost + resale value

Worked example

A $800 upgrade that cuts a $60 bill to $20

You pay $800 once and your monthly bill drops from $60 to $20. You look at the next five years.

Worked example, step by step
Step Result
Saving per month $60 − $20 = $40
Saving per year $40 × 12 = $480
Payback $800 ÷ $480 = 1.67 years, or 1 yr 8 mo
Net benefit over 5 years $480 × 5 − $800 = +$1,600

Common questions

What counts as the upfront cost?

Whatever you pay once to get the saving: the purchase, the installation and any fees. A rebate or incentive is entered separately and subtracted. If the rebate is larger than the cost, it is capped at the cost.

Why does the payback change when I add yearly cost increases?

When energy or service prices rise, the gap between the old and the new cost grows, so later years save more and payback arrives sooner. The calculator applies the same percentage increase to both costs.

What if the new cost is not lower than the current one?

Then there is no saving to recover the upfront cost from. The calculator says it never pays off at these costs, hides the year-by-year table and shows the loss as a negative net benefit.

What does the resale value do?

A resale or salvage value at the end of the period is added to the net benefit, because you get that money back. It does not change the payback time, and it is capped at the upfront cost.

Other ways to ask what it costs you

What a price increase costs you How much a price rise costs per month, per year and over the years ahead. Open calculator → Cost per unit and per use Big pack or small, buy or subscribe — which is cheaper once you divide it out. Open calculator → What it costs to run What an appliance or a habit costs per month and per year, and what a replacement saves. Open calculator →

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