MBA ROI pillar image

Calculating the ROI of an MBA

By Marjorie DeGraca

Earning a Master of Business Administration (MBA) graduate degree can revitalize career paths and change lives—but it can come at a high financial cost. Total cost at the top-25 ranked business schools averaged over $200,000 in 2023. That kind of investment understandably gives pause to many potential MBA students, some of whom may still be paying off student debt left over from their undergraduate degrees.

While MBAs are certainly a significant investment, they may be a wise one. For the right people looking to shift or improve their career paths, an MBA degree can open doors not previously imagined and can offer both tangible and intangible, financial and non-financial benefits.

Sign up to learn more about the Berkeley MBA

Once you know what those assorted benefits are, you have something against which to measure the estimated cost of your MBA degree. This allows you to more accurately and contextually calculate a return on investment for a professional business degree. And if you decide to pursue an MBA, this same line of thought can also help you select the best MBA program for your needs.

MBAs by the numbers

Consider these statistics for 2023 graduates from the top-ranked full-time MBA programs in the U.S., quoted directly from U.S. News & World Report:

  • Among the 124 ranked full-time MBA programs that reported salary data to U.S. News in an annual survey, the overall average base salary plus bonus was $128,997
  • At the 10 MBA programs where grads received the highest compensation, the overall average base salary and signing bonus was $210,676, up more than $17,500 from the previous year's top 10 programs
  • 18 programs reported that 95% or more of their graduates were employed within 3 months after graduation and 37 schools reported that 80% or more of their grads were employed within 3 months

However, these statistics only scratch the surface at the potential ROI an MBA could offer.

14 Steps to Calculate the ROI of an MBA

Statistics are one way you can judge the ROI of an MBA degree, but many other lesser-recognized benefits should also factor into how you measure the true return on investment of your degree.

1. Determine the average salary-to-debt ratio

The cost of an MBA can be relatively high, but that cost coincides with higher starting salaries for MBA graduates. Experts predominantly calculate and compare an MBA program’s ROI to others using the average salary-to-debt ratio. The figure used for the salary component tends to be based on starting salaries, while the debt figure is the total debt you would assume to attain the degree. This is one of the most common methods you’ll see quoted by experts and news media.

2. Factor potential signing bonuses into that ratio

In addition to starting salary, MBA graduates should also consider potential signing bonuses, which can help make a dent in student loan payments. U.S. News reports that of the top 10 business schools where grads received the highest compensation for 2023, the average salary and bonus is $210,676 – more than enough to quickly pay back the debt incurred in obtaining the MBA..

3. Consider long-term salary projections

Long-term salary projections account for raises and other income boosts an MBA graduate might earn over time. You can then use that projection instead of a starting salary to calculate the salary-to-debt ratio. The time period may vary, but about 10 years is a typical length of time to calculate. Experts can then compare their projected 10-year salary with a 10-year salary without an MBA for another ROI factor.

4. Compare MBA programs in general to other professional degrees

Aside from the degree itself and the education and implications it brings, you can also compare the MBA experience with other professional degrees. A typical full-time MBA degree program takes about one to two years of school. Medicine or law degrees, however, take longer to complete—and take longer for you to begin working at your new higher pay rate.

5. Assess the value of the education itself…

The skill sets and knowledge of advanced business concepts are a clear benefit of any MBA degree, as you, personally, become a more knowledgeable and capable manager or business owner. But it also benefits any future employer thanks to the increased productivity and higher-quality employee that MBA programs tend to produce.

6. …And the soft skills that came with it

In addition to more complex business concepts, an MBA program will also emphasize the importance and teach the finer points of effective teamwork, leadership, problem solving, self-reflection and assessment, and critical thinking. These more pragmatic concepts may apply more generally for successful people across the board, but they are especially critical.

7. Weigh the freedom of entrepreneurship (when applicable)

The sense of independence that comes from owning your own business cannot be understated, but it’s also not easily financially quantified. Some individuals prefer to have control over their entire business, while others may prefer smaller managerial roles with another company to actual business ownership. This is a personal preference, and entrepreneurship certainly is not for everyone. But for those whom entrepreneurship does work for, the freedom alone can be well worth the cost of the degree.

8. Improve your job mobility

If you are already employed with a company, earning an MBA could fast-track your next promotion—and the raise that will undoubtedly come with it. If you’re out of a job or unhappy with your current one, your MBA could be the final weight in a decision for another employer to hire you. And if you own your own business, this degree could be key to establishing and increasing trust among your clientele and colleagues.

9. Expand your LinkedIn network with your program’s alumni network

The alumni from your MBA program could easily produce a built-in Rolodex of business colleagues scattered across any and all industries. Fellow grads could end up being networking aids or referral sources, depending on where your MBA experience leads you. Beyond professional relationships, this alumni network could also produce valuable friendships and the lifelong encouragement, support, and work-related understanding that comes with them.

Whether you befriend fellow students during the program or network with them afterward, this group of people could be instrumental in your shared successes.

10. Take advantage of your school’s pool of professors

Like fellow MBA students and graduates, professors can also be invaluable as potential personal and professional mentors. They themselves could introduce you to anyone in their own Rolodex of business contacts, cultivated possibly over decades. With many programs offering lifelong learning benefits, professors can be an invaluable source of knowledge even after you graduate, which increases the more intangible return you enjoy from this degree over time.

11. Utilize your program’s career resources

Besides professors, your school may also offer an array of online or on-campus career coaching and career-development resources and services. These could also offer an advantage when seeking a new position during your studies (if you’re in a part-time or executive program, the first post-MBA job position), or when seeking further educational opportunities after graduation.

12. Reduce your opportunity cost with a part-time or executive MBA

If a full-time MBA program is too much of a commitment, you could reduce your opportunity cost by choosing a part-time or executive MBA program, options which also let you apply learning in the workplace in real time. The cost structure and class schedule may less intensely impact your time, budget, or other resources. To calculate this portion of ROI for an MBA, you can factor in the foregone salary cost of a full-time program compared to the part-time or executive MBA you chose instead.

13. Broaden your worldview

MBA graduates were surveyed about their perceived financial and non-financial costs and benefits of their professional degree. Among the top non-financial costs was a broadened worldview and increased wisdom, gleaned from the classroom and from on-the-ground travel and global consulting opportunities. While certainly applicable to business, this broadened worldview can positively impact many other aspects and relationships in an MBA grad’s life.

14. Increase your self-confidence and self-worth

In that same study, participants also ranked increased confidence as one of the highest-weighing and most important non-financial benefits of earning an MBA degree. The power behind those three letters is palpable in the business world and among those in the know.

Anyone who puts in the time, effort, and dedication to completing this degree achieves something worth being proud of. Not only is this a noteworthy achievement in general, but an investment in yourself and career that will continue to propel your efforts going forward.

Overall ROI of an MBA

The overall return on investment for an MBA can be difficult to quantify to the cent. What makes more sense is looking at the bigger picture and visualizing the way your career will level up with the help of this investment in a degree and, more importantly, in yourself.

An MBA from a top business school can help you grow your network and leadership skills so you can take the next step toward a fulfilling career and increase your salary. Are you ready to invest in yourself?

Updated June 2024

Sign up to learn more about the Berkeley MBA


Posted on August 2, 2023
Themes: MBA Benefits
Marjorie DeGraca
Marjorie DeGraca is the Executive Director of Admissions for Berkeley MBA Programs for Working Professionals.