Return on Investment (ROI)

Your constantly-updated definition of Return on Investment (ROI) and collection of videos and articles
228 shares

What is Return on Investment (ROI)?

Return on investment (ROI) is a financial metric used to analyze the efficiency of an investment. ROI = profit from an investment / investment cost, and is usually expressed as a percentage. For instance, if you invest $1,000 in creating a website and it increases your sales by $1,500, then the ROI = (1,500 - 1,000)/1,000 = 50%.

ROI is used more broadly in design to describe the effect of an investment in a design-related area—e.g., investments in design, usability, or user research. When used in this way, ROI cannot be calculated as simply as in finance, because the investment is not always measured in the same unit as the benefit, and the effect is not always direct. In design projects, an investment is often money or time, but the benefit could be increased user satisfaction, improved user efficiency, or the reduction of user error—all of which will probably lead to an indirect increase in profits.

While calculating the ROI of design efforts is difficult, some organizations have attempted to do so by analyzing the net effect that a focus on design has on the overall profitability of a company. The Design Management Institute, for instance, has found that design-centric companies (such as Apple, Coca-Cola, and IBM) outperformed the S&P index (which indicates the industry’s average performance) by 228% over a 10-year period from 2003 to 2013. Thus, having a solid grasp of ROI and an appreciation for how they can translate the dynamics involved to the user experience will give designers a powerful advantage. With an enhanced scope when determining what features a design needs versus those which may be superfluous, a designer can concentrate on how the value of convenience the user will place on it will reflect the financial health of the work after rollout.

Literature on Return on Investment (ROI)

Here’s the entire UX literature on Return on Investment (ROI) by the Interaction Design Foundation, collated in one place:

Learn more about Return on Investment (ROI)

Take a deep dive into Return on Investment (ROI) with our course How to Become a Freelance Designer .

Have you ever dreamed of breaking away from the 9-to-5 grind and becoming your own boss? How about escaping from your office setting—the endless meetings, corporate politics, and other irritations that fill your mind on a Sunday night? If so, have you ever considered how different life might be as a freelancer, or as the founder of your own design agency? Maybe, you’ve even wanted to do all that from the beach or from a trendy coffee shop in an inspiring urban landscape? The truth is that there’s nothing stopping you from doing any of the above. Going into business for yourself as a freelancer or entrepreneur can be a highly rewarding and exciting way to work—this course is here to show you how you can achieve that, and jump the fence that keeps all too many bright and motivated people trapped so tragically in the workaday ennui of being employees.

You are not alone in your desire to work in a way and location of your choice; freelancing is the most rapidly growing business market on Earth. Gone are the days of people’s perceiving self-employment as “not a proper job”; contractor positions are increasingly being held by the best and brightest in the industry through a phenomenon coined “The Rise of the Supertemp”. In the United States alone, freelancing is a $1 trillion industry, according to Upwork. It’s the way to work in many industries moving forward, and you can be part of it! Better still, it will give you a new lease of life which will leave you wondering why you hadn’t done it sooner.

Freelancers and entrepreneurs often get to choose where they work. By redefining the way you work, you can also redesign the way you live. Once you have the contracts, you can set up wherever you have your heart set on—be it Prague, Delhi, Koh Phangan, Cape Town, or Rio, to name just a few. It doesn’t matter if you don’t have a ton of savings in the bank—tens of thousands of other freelancers built their freelance businesses from nothing. The founders of the Interaction Design Foundation can attest to this—Mads Soegaard and Rikke Friis Dam built the platform while living in low-cost countries, traveling the world as digital nomads as soon as the internet would allow them to. This enabled them to focus on creating high-quality educational content while having low expenses. It’s an ingenious way of having the best of both worlds (freedom of work and seeing the world), all while keeping the wolves away from the door money-wise. In fact, most of our employees and loyal freelancers now live and work as dedicated and hardworking digital nomads all over the world.

This course will show you how to create a freelance business from scratch—from overcoming your fears, to the practicalities of making a brand name of yourself. We will share knowledge regarding how you can start your own design agency or start working as a freelancer from pretty much anywhere, at any time. You will be able to live the life of your dreams while providing high-quality services and products for the benefit of your clients. We will introduce you to the best and most relevant research, as well as ideas and best practices, derived from others who were once in your shoes but who are now living and working the way they always wanted to.

This course is created and presented by one of the founders of the Interaction Design Foundation, Rikke Friis Dam. Rikke is Editor-in-Chief and in charge of our educational profile. She hires and works closely with highly skilled freelancers and entrepreneurs on a daily basis. So, what are you waiting for? There’s no reason for you to sit in an office, counting down the clock and taking orders unless you truly want to live like that. Your clients can be based anywhere on Earth, and so can you; it’s time to quit dreaming and start doing.

All open-source articles on Return on Investment (ROI)

Please check the value and try again.

Open Access—Link to us!

We believe in Open Access and the democratization of knowledge. Unfortunately, world-class educational materials such as this page are normally hidden behind paywalls or in expensive textbooks.

If you want this to change, , link to us, or join us to help us democratize design knowledge!