AI ROI calculator

The calculator Payback and first-year return

Deciding where AI actually pays before you spend a penny is the first job in AI for Your Business: Basics →

How to read it A project pays only if the saving is real

An AI or automation project costs money twice: once to set up, and then every month to run. It pays back through the time it frees and the costs it removes. This calculator turns those into the three numbers a business owner actually decides on — how many months until it has paid for itself, what it leaves you at the end of year one, and the return on the whole first year's spend.

The catch sits in one input. Hours saved are only worth money if that time is genuinely redeployed — billed to another job, spent winning work, or taken off the payroll — and a monthly cost only helps if it actually leaves the business. A calculator can't promise either. It does the arithmetic honestly; the honesty of the hours is on you.

The formula, in full

Monthly gross benefit = hours saved × loaded hourly labour cost + other monthly savings. Monthly net benefit = gross − monthly tool cost. Payback period = setup cost ÷ monthly net (in months) — shown only when the net is positive, because a project that loses money every month never pays back. First-year net = monthly net × 12 − setup cost. First-year ROI = (annual benefit − annual cost) ÷ annual cost, where annual benefit = gross × 12 and annual cost = setup cost + monthly cost × 12.

A worked example

Say a project costs £5,000 to set up and £200 a month to run, and it saves 40 hours a month of work that used to cost £30 an hour loaded, with no other savings you're sure of. The gross benefit is 40 × £30 = £1,200 a month; net of the £200 tool cost that's £1,000 a month. It pays for itself in £5,000 ÷ £1,000 = 5.0 months, leaves £7,000 at the end of year one (£1,000 × 12 − £5,000), and returns 94.6% on the first year's spend (£14,400 of benefit against £7,400 of cost). A strong project — as long as those 40 hours were real.

Edge cases the calculator handles

• A net benefit of zero or below shows the payback as "—": the project doesn't cover its own monthly cost, so it never pays back, however long you wait.
• A first-year net can be negative even when the monthly net is positive — that just means the setup cost hasn't been earned back inside twelve months yet. Check the payback period to see how far past year one it lands.
• "Other monthly savings" is left at 0 by default on purpose. Only add a figure you could defend — error reduction or faster turnaround you can actually point to — not a hopeful guess.

Common questions

What counts as the loaded hourly labour cost?

Not just the wage. Take what the person costs the business per hour all in — pay plus the overhead that rides on it (tax, benefits, tools, space) — for whoever did this task before. That's the true value of an hour you hand back to them.

What's the most common mistake with this?

Over-stating the hours saved. It's the single biggest source of a flattering-but-false return. Measure the task honestly before and after — time it for a week each way — rather than estimating. A project that saves 12 real hours beats one that "saves 40" on paper and 10 in truth.

Is this financial advice or a guarantee?

No. It's arithmetic on numbers you enter, and it isn't financial advice. What a project actually returns depends on whether the freed time is redeployed and the costs really leave the business — neither of which this box controls. It just makes the decision honest before you spend.