Formula
Cost of Delay Formula (Opportunity Cost of Waiting)
The cost of delay is the gap between starting now and starting later under the same assumptions. Here’s a simple formula, plain definitions, and a worked example.
Published: December 22, 2025 · Updated: December 22, 2025 · By FinToolSuite Editorial
Test the formula in the calculator
Run “start now” vs “start later” with your numbers.
Quick answer
Cost of Delay ≈ Value(start now) − Value(start later), using the same rate and end date. The gap depends on your rate and time assumptions.
Picking a return assumptionDisclaimer
Educational purposes only; not financial advice. Examples are illustrative; real returns vary and investments can go down as well as up. Fees, taxes, inflation, and provider rules vary by country and account type.
The core formula (lump sum)
Same end date, same rate, same principal; only the start date changes. For a lump sum:
A_now = P * (1 + r/n)^(n * t) — value if you start now.
A_later = P * (1 + r/n)^(n * (t - d)) — value if you start after a delay d.
Cost of Delay (COD) = A_now - A_later
Each line uses the compound growth structure. See more background in the compound interest formula.
Variable definitions
- P: starting amount (principal). Example: £1,000–£20,000.
- r: annual rate as a decimal (5% = 0.05). Common mistake: mixing 5 and 0.05.
- n: compounding periods per year (e.g., 12 for monthly, 1 for yearly).
- t: total years from now to the end date.
- d: delay in years (6 months = 0.5). Common mistake: forgetting to convert months to years.
Worked example (rounded)
P = £5,000, r = 5% (0.05), n = 12 (monthly), t = 15 years, d = 1 year delay.
Start now
Estimated A_now: ~£10,400
Start after 1 year
Estimated A_later: ~£9,900
Estimated cost of delay
~£500 difference
Try these numbers in the Cost of Delay Calculator to see the projections in your browser.
Contributions?
This formula covers lump sums. If you want to model periodic contributions, use the calculator to handle the series of cashflows and timing.
Notes on assumptions & limitations
- Returns are assumptions, not guarantees.
- Fees, taxes, and inflation can reduce net outcomes.
- Compounding frequency can differ by account/provider.
- Real-world deposits may not happen exactly on schedule.
More on rate choices: return assumption guide.
FAQ
What is the cost of delay formula?
COD ≈ Value(start now) minus Value(start later), using the same rate and end date.
How do I calculate cost of delay for 6 months?
Convert 6 months to years (0.5), use it as d, and compute A_now and A_later with the same end date.
What does “opportunity cost” mean here?
It’s the projected difference between starting now and starting later with the same inputs.
What rate should I use?
Use illustrative ranges and compare. See rate selection tips.
Does compounding frequency change cost of delay?
It can adjust both A_now and A_later. Keep frequency the same across scenarios for fair comparisons.
How do fees, taxes, or inflation affect the result?
They can lower net outcomes. Adjust assumptions if you want to see different net projections.
Are calculator results guaranteed?
No. They are estimates based on your inputs; real outcomes can differ.
Is cost of delay the same as “lost profit”?
It’s an illustrative difference between two modeled paths, not a realized profit or loss.
Next steps
Run two scenarios with the same inputs: start now vs start after X months. Compare the estimated cost of delay side-by-side.