Calculating ROI for Workflow Automation
Before investing in automation, you need to know: Will this actually save us money?
Here's a practical framework for calculating the ROI of workflow automation—with real examples.
The Basic Formula
ROI = (Net Benefit / Cost of Investment) × 100%
Net Benefit = (Time Saved × Hourly Cost) + Error Reduction + Opportunity Value - Implementation Cost
Step 1: Measure Current State
Time Tracking
For one week, track:
- How many times the task is performed
- How long each instance takes
- Who performs it (and their hourly cost)
Example: Invoice processing
- Frequency: 50 invoices/week
- Time per invoice: 15 minutes
- Performed by: Accounting clerk ($25/hour)
- Total time: 50 × 15 min = 12.5 hours/week
- Weekly cost: 12.5 × $25 = $312.50
- Annual cost: $312.50 × 52 = $16,250
Error Cost
Track:
- How often errors occur
- Cost to fix each error
- Cost of error impact (late fees, customer dissatisfaction, etc.)
Example: Invoice processing errors
- Error rate: 5% (2-3 invoices/week)
- Time to fix: 30 minutes
- Late fees: $50 average
- Annual error cost: (2.5 × $12.50 fix cost + $50 penalty) × 52 = $3,281
Step 2: Estimate Automation Savings
Time Saved
Most workflow automation saves 60-90% of time on repetitive tasks.
Example: Invoice automation
- Manual time: 15 minutes
- Automated time: 2 minutes (human review)
- Time saved: 13 minutes per invoice
- Weekly savings: 50 × 13 min = 10.8 hours
- Annual savings: 10.8 × $25 × 52 = $14,040
Error Reduction
Automation typically reduces errors by 80-95%.
Example: Invoice automation
- Current error cost: $3,281/year
- Expected reduction: 90%
- Annual savings: $2,953
Opportunity Value
What could your team do with the freed-up time?
Example: Accounting clerk time
- Time freed: 10.8 hours/week
- Can now focus on:
- Month-end closing (faster reporting)
- Cash flow analysis
- Vendor relationship management
Estimated value: $5,000/year (conservative)
Step 3: Calculate Implementation Cost
One-Time Costs
- Consultation/planning: $2,000
- Implementation: $5,000
- Training: $500
- Total: $7,500
Ongoing Costs
- Tool subscription: $50/month = $600/year
- Maintenance: $1,000/year
- Total: $1,600/year
Step 4: Calculate ROI
Year 1
- Time savings: $14,040
- Error reduction: $2,953
- Opportunity value: $5,000
- Total benefit: $21,993
- Implementation cost: $7,500
- Ongoing cost: $1,600
- Net benefit: $21,993 - $9,100 = $12,893
- ROI: ($12,893 / $9,100) × 100% = 142%
Years 2-3
- Annual benefit: $21,993
- Annual cost: $1,600
- Net benefit: $20,393/year
- ROI: 1,275%
Payback Period
4.9 months (Initial investment recovered in under 5 months)
Real-World Examples
Example 1: Customer Support Triage
- Manual time: 30 min/ticket × 200 tickets/week
- Agent cost: $30/hour
- Annual cost: $468,000
- Automation reduces to 5 min/ticket
- Annual savings: $390,000
- Implementation cost: $25,000
- ROI: 1,460%
Example 2: CRM Data Entry
- Manual time: 10 min/lead × 500 leads/week
- Sales ops cost: $35/hour
- Annual cost: $151,667
- Automation reduces to 1 min/lead
- Annual savings: $136,500
- Implementation cost: $8,000
- ROI: 1,606%
When Automation Doesn't Make Sense
❌ Low frequency tasks: Performed less than 10 times/month
❌ Highly variable processes: No consistent pattern
❌ Requires creative judgment: AI agents may help, but traditional automation won't
❌ Short lifespan: Process will change significantly within 6 months
Your ROI Calculator
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