How to use variables in a command in sed?

This might work for you:

sed 's|$ROOT|'"${HOME}"'|g' abc.sh > abc.sh.1

Say:

sed "s|\$ROOT|${HOME}|" abc.sh

Note:

• Use double quotes so that the shell would expand variables.
• Use a separator different than / since the replacement contains /
• Escape the $ in the pattern since you don't want to expand it.

EDIT: In order to replace all occurrences of $ROOT, say

sed "s|\$ROOT|${HOME}|g" abc.sh

This may also can help

input="inputtext"
output="outputtext"
sed "s/$input/${output}/" inputfile > outputfile