Value of the next-best alternative. The Opportunity Cost Calculator takes return of the option you chose, return of the best alternative you gave up and returns opportunity cost plus relative to the chosen return, reading. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Good business decisions come from putting numbers on the options before committing. Run the calculation with your best estimate, then again with a pessimistic one, and see whether the decision survives both. Use the worked example below to check the maths against your own figures.
How the Opportunity Cost Calculator works
Every decision forecloses another. Opportunity cost puts a number on the best thing you gave up, which is the honest benchmark for judging the choice you made.
Worked example
With the example values (return of the option you chose of $50,000, return of the best alternative you gave up of $65,000), the opportunity cost is $15,000.00; relative to the chosen return 30%, reading The alternative would have paid more. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is opportunity cost calculated?
opportunity cost = return of the best alternative − return of the option chosen.
Which figures do I need?
Return of the option you chose, return of the best alternative you gave up. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
How reliable is the result?
As reliable as the estimates you enter. Run the calculation with optimistic and pessimistic inputs to see the range of outcomes before deciding.
