A salaried expense may remain unchanged. Distinguish capacity released from actual expense reduction.
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
Separate parts, technician time and bay availability for each repair order. For this tire shop calculation, use repair orders, parts invoices and technician time logs and a consistent definition of one service order.
- Tires: include the portion belonging to this service order or reporting period, and record where the value came from.
- Consumables: include the portion belonging to this service order or reporting period, and record where the value came from.
- Fitting labour: include the portion belonging to this service order 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.