BACKGROUND
There are a thousand excuses, er, reasons to purchase that new shiny toy, er, computer. But they all can be reduced down to:
- The old equipment gave up the ghost and it is not cost-effective to repair
- The new equipment is required in order to perform a function not possible with the old equipment, and the new function makes you or the organization more competitive
- You really, REALLY want that new shiny toy
- The new equipment improves your productivity/effectiveness/efficiency to a degree that it pays for itself
The first bullet is a no-brainer. You have a dead system that either cannot be repaired, or it is too costly to repair.
The second is a no-brainer as well. Though it offers no guarantee of success in the marketplace, being more competitive is a cornerstone to success.
There isn’t much I can do about the third bullet (though there is medication that can help), but I may be able to help with the last.
HOW TO USE THE ROI CALCULATORYou may download an Excel spreadsheet
here.
On each line, enter your numbers as close as you can estimate.
The last line will report the estimated time in months for your investment to pay for itself.

You don’t have Excel or Numbers? No problem! The equation is very simple, and you can do it with pencil and paper:
A. Yearly Cost of Employee: $_________________
B. % of Time the Employee is Using the Computer
(enter as a decimal, ie: 25% is entered as .25): _______
C. % of Overall Performance Improvement of New Versus Old Computer
(enter as a decimal, ie: 25% is entered as .25): _______
D. Yearly Productivity Advantage: (A x B x C): $_________________
E. Cost of New Computer
(Include software upgrades, installation tech time): $_________________
F. Months for New Computer to Pay for Itself: (E/D x 12): __________
Just a final word to the CPA’s and accountants out there...
Yes, I know that this is a grossly over-simplified accounting of ROI. It does not take into account depreciation, etc. But what it does do is give a very good approximation to actual ROI without having to pay
you several hundred dollars to get just a few percentage points closer to reality!
Sorry.
Tags: Total Cost of Ownership, ROI, Return On Investment, calculator