Free tool
Build the business case for an automation or AI project.
A vendor-neutral model for any provider and any price structure. Risk-adjusted and discounted the way published total economic impact studies are, with every formula and source shown.
Start the calculatorFree, no sign-up Updated Method and sources Markdown version
Summary and how to use it
In short
Automation ROI is net present value divided by discounted costs. Value hours removed at the loaded labour cost (wage plus about 43% for benefits in the US), count only the share of freed time that becomes money, add errors prevented, subtract every one-time and running cost, cut benefits for risk and discount the lot over three years at your cost of capital.
Worked example
A team handles 2,000 items a month at 6 minutes each, paid the US private-industry average of $32.36 an hour plus 43% for benefits. Automation removes 60% of the handling time and prevents half of 40 monthly errors costing $60 each, and 70% of the freed time turns into value. Against a $15,000 build, 80 hours of internal project time, $200 a month in subscriptions, $100 a month in support, $0.02 per item in usage and 20% upkeep, with a 10% risk cut, 10% contingency and a 10% discount rate over three years, the net present value is about $97,000, ROI 235% and payback seven months. The conservative case still returns about $39,000.
How to use it
- 1Measure the process today
Enter items handled a month, minutes per item, the hourly wage and the benefits load, and what errors cost.
- 2Estimate what changes
Set the share of handling time removed, errors prevented, how much freed time becomes value, and months to adoption.
- 3Enter every cost
Add one-time costs and running costs in any price model: flat plans, seats, usage per item, support and upkeep.
- 4Set finance and risk
Choose the period, discount rate, benefit risk adjustment and cost contingency.
- 5Read the conservative case
Check the conservative scenario and the sensitivity chart before deciding. Measure the inputs that move the answer most.
Calculator
Five steps, about three minutes.
Defaults are a worked example from US averages. Replace them with a week of your own numbers.
Any price model
Where each kind of bill goes.
Most stacks mix several. Add each line to the running costs step; the calculator does not assume any vendor.
- Per seat
Charged per user each month. Common for internal apps and databases.
- Flat plan
A monthly tier with a task or operation allowance.
- Usage
Paid per call, token, message or email sent.
- Infrastructure
Hosting, monitoring and error tracking under the system.
Logos show examples of each model, not recommendations. Check current prices on each provider’s own pricing page.
Scenarios
Conservative, expected and optimistic.
A case that only works in the optimistic column is not ready to sign.
Cash flow
Year by year.
Year one carries every one-time cost and the adoption ramp, so it is always the weakest.
Sensitivity
Which inputs move the answer most.
Net present value with each input 20% lower and 20% higher. Measure the top rows properly before committing.
Method
Every formula, in order.
Nothing is hidden. Rebuild it in a spreadsheet and you will get the same answer.
- 01Loaded rate
wage × (1 + load)What an hour costs the employer, not what the employee is paid.
- 02Monthly benefit
hours removed × loaded rate × realisation + errors prevented × cost per error + profit + avoided cost ÷ 12Ramps up linearly over the adoption months, then is cut by the benefit risk adjustment.
- 03Costs
one-time in month 0 + (seats + flat plans + usage × items + support + upkeep) each monthYour own team’s project and training hours are costed at the loaded rate. Both carry the contingency.
- 04Present value
Σ cash flowₘ ÷ (1 + r)ᵐ, where r = (1 + annual rate)^(1/12) − 1A dollar in month 30 is worth less than a dollar today.
- 05ROI and NPV
NPV = PV benefits − PV costs; ROI = NPV ÷ PV costsThe definitions used in published total economic impact studies.
- 06Payback and IRR
first month cumulative cash ≥ 0; IRR: rate where NPV = 0Payback shown plain and discounted. IRR is solved numerically and stated per year.
Sources
Where the numbers come from.
Each default and rule is traced to a published source, or labelled as practitioner guidance where no audited benchmark exists.
- Forrester Total Economic Impact methodologyUsed forModel structure, 3-year period, 10% discount rate, risk adjustment
Weighs benefits, costs, flexibility and risk. Published studies are risk-adjusted and discounted, most often over three years at 10%.
- US BLS Employer Costs for Employee Compensation, Dec 2025Used forHourly wage $32.36 and the 43% load
Private industry: $46.15 an hour in total, of which wages $32.36 (70.1%) and benefits $13.79 (29.9%).
- McKinsey Global Institute Generative AI and the future of work in America, 2023Used forThe warning above 85% of time removed
About 30% of US work hours could be automated by 2030. Whole jobs rarely clear that bar; single tasks often do.
- Practitioner benchmarks Maintenance planning figuresUsed forUpkeep at 20% of build a year
Published planning figures run from 15 to 22% of build cost a year for stable automation, and 30 to 40% where APIs or prompts change often. No audited benchmark exists.
- Finance practice Hard and soft savingsUsed forRealisation at 70%
Freed time is not cash unless hiring, overtime or temp spend falls, or the time moves to work that earns. Finance teams commonly count 60 to 80%.
Terms
What the terms mean.
- Net present value (NPV)
- Discounted benefits minus discounted costs over the analysis period. Positive means the project earns more than your cost of capital.
- Return on investment (ROI)
- Net present value divided by the present value of costs, the definition used in total economic impact studies.
- Internal rate of return (IRR)
- The annual discount rate at which net present value is zero.
- Discounted payback
- The first month in which cumulative discounted cash flow turns positive.
- Loaded labour cost
- The hourly wage plus benefits, payroll taxes and leave. About 1.43 times the wage in US private industry.
- Realisation rate
- The share of freed time that turns into money: hires not made, overtime cut or work that earns.
- Risk adjustment
- A percentage cut to benefits, and a contingency added to costs, for uncertainty in the estimates.
- Discount rate
- Your cost of capital. Converts future cash into today’s money.
FAQ
Questions about automation ROI.
How do you calculate the ROI of automation or AI?
Add up the benefits (hours removed at the loaded hourly cost, errors prevented and any measured profit or avoided cost) and the costs (one-time build, internal time, training, subscriptions, seats, usage and upkeep) over the analysis period. Discount both to today, apply a risk cut to the benefits and a contingency to the costs, then divide net present value by discounted costs.
What is a loaded hourly cost?
The wage plus everything the employer pays on top: benefits, payroll taxes, paid leave and insurance. In US private industry benefits were 29.9% of total compensation in December 2025, according to the Bureau of Labor Statistics, which is about 43% on top of the hourly wage.
Should time saved count as money saved?
Only partly, unless it changes spending. If no one is hired, overtime does not fall and the freed hours do not go to work that earns, the saving does not reach the accounts. Most finance teams count 60 to 80% of freed time. Set it to 100% only when a cost actually disappears.
What discount rate and period should a business case use?
Use your cost of capital if you know it. Published total economic impact studies mostly use three years at 10% a year. Use a shorter period for fast-changing AI tools, and a longer one only if the system will run unchanged.
How should usage-based AI pricing be included?
Multiply the cost per automated item (model tokens, API calls, OCR pages, task or operation fees) by the number of items the automation handles each month. Check the provider’s current price list, and add headroom for retries and longer inputs.
What is a good payback period?
It depends on your cost of capital and risk appetite, which is why this tool shows discounted payback, net present value and IRR rather than a single verdict. As a check, compare the conservative scenario with the return you would accept on any other investment of the same size.
More free tools
More free tools
- Automation opportunity mapperFree, vendor-neutral automation opportunity mapper. Score each process on impact and ease, plot them on a 2×2, get a ranked roadmap and the right approach for each, with the method and sources shown.Open the tool
- Build vs buy decision toolFree, vendor-neutral build vs buy tool. Compare buying software, configuring a low-code platform and building custom on a weighted scorecard and a discounted three-year total cost of ownership, with the method and sources shown.Open the tool
- AI readiness assessmentFree AI readiness self-assessment across strategy, infrastructure, data, governance, talent and culture, the six pillars of the Cisco AI Readiness Index. 24 questions, a radar chart, a readiness stage and the next steps for your weakest pillars.Open the tool
- AI agent risk and controls plannerFree planner for AI agents. Describe what the agent reads and can do, and get its risk profile, the OWASP LLM risks that apply, a recommended starting autonomy level and the controls to put in place before launch.Open the tool
- All free toolsEvery calculator and planner, with its method and sources.See all