What Kind of ROI Is Required For You to Spend Money On a Tool

by pdufresn. Posted on Sep 13, 2020    1    8


Hey everyone,

What kind of ROI is required for yourself to spend money on a tool? I get ads all the time for save ___ hours by using this tool.

Is there a rule of thumb where $x can save you x hours let's say and it suddenly be that much more worthwhile?

Thoughts?


Comments

PrimaryWarning 1

This is simple. Everyone should know what their time is worth then if the tool is guaranteed to save you more than that then it's worth it. You must also include the learning curve, onboarding and training. In my experience the cost of the tool is cheaper than setup time. I can't tell you how many tools I've bought just to cancel be a use it was cheaper to try than deal with a demo

SafetyMan35 1

It depends on the company and the tool and the problem it solves.

For example, in our business, we use a lot of boxes that are required to be assembled and taped. We did this by hand with a tape gun, but as we grew, we had to bring on people. Despite tons of training, our people can’t consistently tape boxes well, so we are considering an automated tape machine. It may not save much time, but it will increase consistently and the visual appeal of the product to customers.

imsaneinthebrain 1

How much is your time worth? Only you will have that answer. Can you do more with more time? Or no?

  pdufresn 1

Well I'd imagine yes, I suppose I'm looking for a benchmark on how much ROI people look for.

Example: Spend $50/month and save 1 hour per month, probably not worth it unless it's an extremely tedious / messy process to do.

​

How many hours would you have to save for you to pay 5,10,$50 a month for a tool?

imsaneinthebrain 1

Again no one knows what your time is worth. How can anyone else figure out your return on investment when no one knows how valuable your time is?

Think of it like this, how many hours a week will this tool save you? How much is your time worth, multiplied by how many hours you think you’ll save, if that number reached the tool price even within a month of working, I would purchase it. Do you plan on being in business for many years, or only a few weeks?

If it’s weeks then you won’t get return on investment that you’re looking for, if it’s years well congrats on the new tool.

again only you’re gonna be able to figure out that number.

imsaneinthebrain 1

It’s different for everyone though. And there’s not gonna be just a blanket equation that’ll tell you to buy the tool or not. In my experience, spending money on tools that help you get the job done faster is definitely the way to go, but only you know what your time is worth, even if you were to receive an equation, it’ll have variables whoever is writing that equation couldn’t know.

  pdufresn 1

My goal is to better understand what kind of ROI we should be seeking for when comparing price / value add to customers.

Fizzelen 2

The other question is, “will this tool prevent a major stuff up?”, is the cost of getting this wrong too high? I have recently purchased a database schema management tool for the safety factor, saving 2-4 hours manually tracking and syncing changes each monthly release is a bonus