ROI Guide
Calculating Automation ROI
Proven framework for measuring your automation investment returns
Nov 29, 2025 14 min read
Why ROI Measurement Matters
Most companies invest in automation without proper ROI tracking, making it difficult to justify continued investment or prove success to stakeholders. This guide provides a framework for measuring automation ROI accurately.
Key Insight: Companies that track automation ROI see 3x better results because they identify what works and scale accordingly.
The ROI Formula
ROI (%) = (Gains from Automation - Cost of Automation) / Cost of Automation × 100
Step 1: Calculate Total Automation Costs
- Software/Platform: Monthly subscription or licensing fees
- Implementation: Setup, configuration, customization
- Training: Team training and change management
- Integration: Connecting with existing systems
- Support: Ongoing maintenance and updates
For a typical mid-market company: $2,000/month × 12 months + $15,000 implementation = $39,000 Year 1 cost
Step 2: Calculate Time Savings
Formula: Hours Saved Per Week × Team Size × Hourly Rate × 52 weeks
- Identify process time spent manually (use time tracking or estimates)
- Multiply by average hourly cost (salary + benefits / 2000 hours)
- Account for 80% reduction (usually not 100% due to exceptions)
Example: Email management 3hrs/day × 5 employees × $35/hr × 250 days = $131,250 annual savings
Step 3: Calculate Error Reduction Benefits
- Measure current error rate: % of tasks requiring rework
- Calculate error cost: Time to fix + customer impact
- Project improvement: AI typically achieves 99%+ accuracy
Typical calculation: 5% error rate × 1000 transactions/month × $50 average cost = $2,500 monthly error cost. Reducing to 0.1% saves $2,425/month = $29,100 annually
Step 4: Calculate Revenue Impact
- Faster customer response: Lead-to-sale conversion improvement
- Availability: 24/7 operations increase engagement
- Scale without hiring: Handle more customers with same team
- Improved customer satisfaction: Reduces churn
Complete ROI Example: Contact Center
Scenario: 50-person support team, implementing AI agent for customer inquiries
Year 1 Costs:
• AI automation platform: $3,000/month = $36,000
• Implementation & training: $25,000
• Integration & setup: $15,000
• Total Year 1 Cost: $76,000
Year 1 Benefits:
• Time savings (fewer calls): 15 hours/day × $30/hr × 250 days = $112,500
• Error reduction (fewer escalations): $45,000
• Revenue increase (24/7 availability): $150,000
• Reduced employee turnover: $35,000
• Total Year 1 Benefits: $342,500
ROI = ($342,500 - $76,000) / $76,000 × 100 = 351% ROI
Payback Period: 2.6 months
Year 1 Costs:
• AI automation platform: $3,000/month = $36,000
• Implementation & training: $25,000
• Integration & setup: $15,000
• Total Year 1 Cost: $76,000
Year 1 Benefits:
• Time savings (fewer calls): 15 hours/day × $30/hr × 250 days = $112,500
• Error reduction (fewer escalations): $45,000
• Revenue increase (24/7 availability): $150,000
• Reduced employee turnover: $35,000
• Total Year 1 Benefits: $342,500
ROI = ($342,500 - $76,000) / $76,000 × 100 = 351% ROI
Payback Period: 2.6 months
Year 2+ ROI (Much Better)
Year 2 costs drop significantly because implementation is complete:
- Platform cost: $36,000/year
- Maintenance & support: $10,000/year
- Total Year 2 Cost: $46,000
- Benefits continue or increase: $380,000+
- Year 2 ROI: 726%
Common ROI Calculation Mistakes
- Forgetting implementation costs: These are real expenses that must be included
- Overestimating time savings: Use 80% as realistic, not 100%
- Only counting direct labor: Include error costs, customer satisfaction, revenue impact
- Ignoring Year 2+ benefits: These show the true long-term value
- Using wrong hourly rates: Include fully loaded cost (salary + benefits + overhead)
Next Steps
Let Us Calculate Your ROI
Schedule a free consultation. Hari Labs will calculate your specific automation ROI based on your processes and provide a detailed business case.
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