How to Calculate Return on Investment
Calculating ROI with an Apple Watch
How Your Smart Watch Can Be The Strongest Investment You Own
Return on Investment is an easy calculation. The formula can be applied to almost any object or investment. It’s used to calculate how valuable an investment is or can be based on the initial cost of the investment.
- ROI is calculated by subtracting the initial cost of the investment from its final value, then dividing this new number by the cost of the investment, and, finally, multiplying it by 100.
For purposes of this example, let’s breakdown the ROI (return in investment) with the Apple Watch. The Apple Watch series 3 will be our initial investment at a retail price of $199.
Now, most employers offer some kind of benefit in regards to a fitness or health tracking platform. A popular example is the Virgin Pulse platform and so I’ll be using that for this example.
BeWell Benefits Through Your Job
My employer, through Virgin Pulse, rewards employees with up to $500 at the end of the year for earning Virgin Pulse points throughout the year. Fitness tracking watches help with this because you earn points for steps, sleep, and activity which is all tracked through the watch and auto populated in Virgin Pulse. For this example, we will assume you’ve used your Apple Watch and Virgin Pulse app throughout the year and earned the maximum amount of points.
Year 1:
$500 (Virgin Pulse Earnings) – $199 (cost of the Apple Watch series 3) = $301
$301/$199 = 1.51 * 100 = 151%
Year 2:
$1,000 (Total Virgin Pulse Earnings. Year 1 + Year 2) – $199 = $699
$699/$199 = 3.5 * 100 = 351%
Year 3
$1,500 (Year 1 + Year 2 + Year 3) – $199 = $1,301
$1301/$199 = 6.5 * 100 = 653%
Year 4
$2,000 – $199 = $1,801
$1801/$199 = 9.0 * 100 = 905%
Are Fitness Tracking Watches Worth It?
So is the Apple Watch or another fitness tracking watch worth it? YES! If you use your watch in conjunction with your work benefits the watch easily pays for itself. If anyone promised you that in four years you would have a 905% gain on your original investment, would you go for it? I know I would. And the returns only get better the longer you hold on to your original investment. Do you see the power of compounding at work here?
So, if you’re on the fence about whether to plop down a couple hundred dollars for a fitness tracking watch, The Frugal Fireman says to do it!
