Opportunity Cost Calculator

How to read your result

Opportunity cost is the value of the single next-best alternative you give up — not the sum of every option you rejected; compare your chosen option against one strong alternative at a time. Each option's net value is its expected benefit minus explicit costs (visible cash payments), implicit costs (value given up without a cash payment, like foregone income or foregone investment return), the value of your time, and a risk adjustment for uncertain benefits; the opportunity cost of choosing A is the net value of B minus the net value of A — positive means you're giving up value, negative means your choice looks better than the alternative. This distinction matters in accounting too: accounting profit only subtracts explicit costs, while economic profit also subtracts opportunity (implicit) costs — a venture can be accounting-profitable and still be giving up a better use of the same resources. Test conservative, base, and optimistic scenarios; if the winner changes between them, the decision is assumption-sensitive and worth weighing alongside non-financial factors like risk tolerance and reversibility.

How the opportunity cost formula works

Worked example

Choice A — stable job: $60,000 salary, no explicit or implicit costs. Net Value A = $60,000.

Choice B — start a business: $100,000 potential revenue at a 90% probability of success (expected benefit $90,000), $10,000 setup cost (explicit), and the $60,000 salary given up to do it full-time (implicit). Net Value B = 90,000 − 10,000 − 60,000 = $20,000.

Opportunity cost of choosing the business over the job = Net Value A − Net Value B = 60,000 − 20,000 = $40,000 — that is the value given up by choosing the riskier, lower-expected-value option, even though the business looks appealing on revenue alone.

Limitations

• Inputs are point-in-time estimates — the comparison does not update as salaries, returns, or prices change.
• Risk is simplified to a single probability of success and risk discount per option; it cannot capture the full range or timing of outcomes.
• Taxes are not modelled — after-tax income or returns can change which option wins.
• Non-monetary factors — enjoyment, stress, health, relationships — sit outside the numbers unless you rate them in the optional decision-support scores.
• The comparison is only as good as the estimates you enter; small changes in assumptions can flip the winner, which is what the scenario view is for.

Frequently asked questions

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Read the guide

There is no dedicated opportunity-cost guide yet. The formula section above covers explicit vs implicit cost and accounting vs economic profit in full.