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What is the ROI of an MBA Degree?

“What is the ROI of an MBA degree?” is a common concern of every MBA aspirant. Check detailed information to determine what is the ROI of an MBA degree.
authorImageShivani Kumari22 Oct, 2024
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What is the ROI of an MBA Degree?

MBA Degree: The ROI of an MBA reflects the long-term career growth and professional benefits candidates get after completing the course. Although pursuing an MBA is considered highly valuable, candidates face challenges in covering the course fee. This is the reason many MBA aspirants want to know the ROI of pursuing an MBA degree.

When evaluating the ROI of an MBA, students should consider several factors to make a well-informed decision. This includes the total cost of the program, which encompasses tuition, security deposit, living expenses, and any other potential financial obligation during their studies. Further, candidates must compare the total expenses to the tentative salary offered to MBA graduates. Here, it's important to compare these costs with the expected increase in post-MBA earnings and potential career progression opportunities. This balance helps candidates determine the actual ROI of an MBA degree.

How to Calculate ROI of an MBA Degree?

Determining the Return on Investment for an MBA can seem challenging for MBA aspirants. However, having the right data can make it extremely manageable. Additionally, candidates should utilise various MBA return of investment calculators to assist in evaluating different parameters. Here’s a step-by-step guide to calculate the ROI of an MBA:
  • Gather Current Salary Information : Candidates with significant experience should begin by noting their existing salary.
  • Identify Program Costs : Further, they should calculate the total MBA fee fees and the duration of the MBA program.
  • Calculate Salary Increase : In the next step, aspirants should subtract their pre-MBA salary from their expected salary after completing the MBA course.
  • Calculate the ROI : lastly, aspirants should divide the total cost of the MBA program by the salary difference obtained in the previous step. The result will indicate the number of years it may take to recover their investment in the MBA program.

Key Factors to Consider When Calculating ROI of an MBA

Determining the value of an MBA requires a personalised approach to calculating return of investment, as each student’s situation varies in terms of earnings, costs, and career goals. To get an accurate estimate of an MBA's worth, candidates should consider several factors. These include the following:

  • Total Costs

Include all expenses such as tuition fees, study materials, living expenses, stationaries, and any additional costs like travel. Accurate, up-to-date information should be used to assess the full financial requirement for MBA.

  • Debt Considerations

Include any potential debt incurred for pursuing MBA. These include loans from financial institutions. Candidates should include interest payments on these loans to calculate the overall value.

  • Earnings and Opportunity Cost

Evaluate the opportunity cost by comparing the earning potential of MBA graduates with those without an MBA. It’s essential to use industry-specific data related to a country or location to make accurate comparisons.

  • Risk of Non-Completion

Consider the risk of not graduating or taking longer than expected time to complete the MBA program. This could lead to additional costs and can also delay the start of post-MBA earnings.

  • Time Frame for Returns

Analyse the ROI over different time frames, including starting salary, mid-career earnings, and long-term benefits. Also, consider the impact of time spent in the program, particularly if candidates get their first job offer after an extended period of completing their MBA course.

How Does an MBA Provide a Strong ROI?

There are primarily three ways by which an MBA degree offers a high ROI to graduates. These are as follows:

  • Career Advancement

An MBA can significantly expand and accelerate one’s career pathway. The immersive course and hand-on experience gained during MBA are crucial for developing problem-solving and decision-making skills. Both these skills are highly valued in leadership roles. Although candidates can learn leadership and problem-solving in their job roles, an MBA degree provides them with guidance from experts. This way. They are able to improve their efficiency without making any mistakes. Additionally, the soft skills, such as communication and leadership, learned during the MBA program are essential to drive long-term career acceleration.
  • Increased Earning Potential
Another key ROI is the potential for higher earnings. MBA graduates are able to bag higher salaries than those with only a bachelor's degree. Typically, the average starting salary of MBA graduates is 22-40% higher than for those having a UG degree. Additionally, the candidates with an MBA degree are able to increase their salary at a significant rate by gaining experience. Although the salary increases vary for candidates, the financial benefits of an MBA can be substantial, especially when considering long-term earning potential.
  • Professional Connection
MBA programs offer valuable networking opportunities. Students often form close bonds with various peers, which creates lasting personal and professional relationships. Additionally, MBA candidates are able to access alumni networks, which strengthen their global connections. This way, an MBA program can lead to career advancement and provide valuable opportunities across different industries. These connections enhance both professional growth and personal development, offering a high ROI of an MBA.

B-Schools in India With High MBA ROI

Several B-schools in India stand out when evaluating the best return on investment (ROI) for MBA programs. The table below provides an overview of top business schools, including their MBA fees, expected salary, and ROI percentages:
B-Schools in India With High MBA ROI
Institution Course Fees (INR) Expected Salary (INR) ROI (%)
FMS Delhi 1.92 lakhs 25.6 lakhs 1333.33
IIM Ahmedabad 23 lakhs 25.83 lakhs 112.30
IIT Bombay 8.7 lakhs 20.8 lakhs 239.08
IIM Bangalore 23 lakhs 24.54 lakhs 106.70
JBIMS Mumbai 6 lakhs 20.13 lakhs 335.50
IIM Calcutta 20+ lakhs 28 lakhs 140.00
MDI Gurgaon 21.34 lakhs 22.05 lakhs 103.33
SP Jain Mumbai 19 lakhs 26.36 lakhs 138.74
IIM Indore 16.1 lakhs 22.92 lakhs 142.36
XLRI Jamshedpur 23.6 lakhs 24.3 lakhs 102.97
IIT Delhi 9.6 lakhs 22.29 lakhs 232.19
IIM Lucknow 14.16 lakhs 24.25 lakhs 171.26
IIT Kharagpur 10.52 lakhs 18.1 lakhs 172.05
IIFT Delhi 16.7 lakhs 20.48 lakhs 122.63
PUMBA Pune 1.4 lakhs 6.43 lakhs 459.29
TISS Mumbai 1.92 lakhs 20.06 lakhs 1044.79
NITs (All Campuses) 0.72 lakhs 5.6 lakhs 777.78
NITIE Mumbai 12.53 lakhs 21.5 lakhs 171.59
UBS Chandigarh 0.35 lakhs 11.78 lakhs 3365.71
IIM Kozhikode 19 lakhs 23.08 lakhs 121.47
SIBM Pune 18.8 lakhs 20.27 lakhs 107.82
PW MBA Online Coaching offers expert guidance to prepare for exams like CAT , XAT , GMAT , etc., which are a gateway to entering top MBA colleges. Join PW MBA Coaching Class to strengthen your exam preparation with regular live lectures, recorded video lessons, updated study materials, and mock tests with detailed performance analysis.
Also Read
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What is the ROI of an MBA Degree FAQs

Is MBA a profitable degree?

Yes, pursuing an MBA helps candidates get high-paying job offers in various industries. Additionally, MBA students are able to access diverse peer connections and an international alumni network, which offers high value throughout their careers.

Which MBA college has highest ROI?

MBA colleges like FMS Delhi, JBIMS Mumbai, NITIE Mumbai, TISS, and IIT Delhi offer the highest ROI in the management category.

Which MBA is highly paid?

Finance managers, operation managers, international business managers, and marketing managers are highly paid-MBA graduates.

Which branch of MBA is best?

MBA in finance is considered best as it help candidates get job roles like investment bankers, finance managers, etc., that are highly paid across the world.

Can an MBA earn in crores?

Yes, candidates with an MBA are able to earn several crores after gaining experience.
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