Payback Period Calculator guide
Payback Period Calculator: How Long to Break Even
Use our payback period calculator to work out how long an investment takes to pay for itself, with simple and discounted payback.
By the AllCalculator editorial teamUpdated 16 October 20261 min read
How long until an investment pays for itself? Whether it's solar panels, new equipment or insulation, our Payback Period Calculator tells you.
How to use the calculator (Payback Period Calculator)
- Enter the initial cost.
- Enter the yearly cash inflows or savings: one figure if they're the same each year, or a list.
- Enter a discount rate for the discounted payback.
How it works
- Simple payback: add up the yearly inflows until they cover the cost.
- Discounted payback: the same, but each year's inflow is discounted, because money later is worth less.
With equal yearly inflows: payback = cost ÷ yearly inflow.
A worked example
With the calculator's default settings, a £12,000 investment saving £3,000 a year pays back in 4 years, or about 4.6 years discounted at 5%.
Frequently asked questions
What's a good payback period?
It depends on how long the investment lasts. Payback well within its lifespan is a good sign.
What does payback ignore?
What happens after it's paid back. Use our IRR Calculator for the full picture.
For heat pumps and solar, try our ROI Calculator for Air Source Heat Pump with Solar Panels.
Sources and further reading
Links open official and independent websites in a new tab.
This guide is general information to help you understand your options. It isn't financial, tax, legal or building advice and doesn't take your personal circumstances into account. Figures were checked when the guide was last updated and can change, so confirm anything important with GOV.UK, HMRC, a regulated adviser or a qualified tradesperson.