With the illustrative inputs below, the result is 4.6154 months.
Try this with your own numbersFormula and worked example
Payback = setup cost / (hours saved × hourly cost − monthly software cost)
| Input | Example |
|---|---|
| One-time setup cost | 3,000 |
| Monthly labour hours saved | 20 |
| Hourly cost of saved time | 40 |
| Monthly software cost | 150 |
| Calculated result | 4.6154 months |
Choose reliable inputs
Plan materials, travel and crew time before committing to a price. For this carpentry shop calculation, use a completed job sheet, supplier quotes and a crew schedule and a consistent definition of one carpentry job.
- Timber: include the portion belonging to this carpentry job or reporting period, and record where the value came from.
- Hardware: include the portion belonging to this carpentry job or reporting period, and record where the value came from.
- Finishing time: include the portion belonging to this carpentry job or reporting period, and record where the value came from.
Use the same currency for every money input. Do not mix weekly costs with monthly revenue, or count the same expense in both an itemised cost and allocated overhead.
Are all saved admin hours a cash saving?
A salaried expense may remain unchanged. Distinguish capacity released from actual expense reduction.
Saved time becomes cash saving only if costs fall, or contributes revenue if redeployed productively.
What if this input changes?
If one-time setup cost rises by 10%, this example changes by 0.4615 months. This shows the effect of one change; it does not predict what will happen.
Open the calculator, save your baseline, then change the input supported by the least reliable estimate in your records. Compare both scenarios before committing to a price or capacity promise.