AI ROI: how to measure it
AI ROI is measured by comparing the value AI creates — hours saved, revenue gained, costs avoided — against the cost of building and running it. A simple formula is (value created − total cost) ÷ total cost. Efficiency projects often target payback within 6–12 months. The key is defining measurable value before you start.
Where AI creates measurable value
- Time saved — hours of manual work removed (the easiest to quantify).
- Cost avoided — reduced errors, rework, or headcount growth.
- Revenue gained — more leads captured, higher conversion, faster service.
- Risk reduced — fewer compliance or quality failures (harder to quantify but real).
How to calculate AI ROI
A simple approach: estimate the annual value created, subtract the total cost (build plus run), and divide by the total cost.
Example: if an automation saves 28 hours a week at £25/hour, that’s ~£36,400 a year. If it cost £30,000 to build and £5,000/year to run, first-year ROI is roughly (£36,400 − £35,000) ÷ £35,000 ≈ 4%, rising sharply in year two once the build cost is behind you. [EXAMPLE figures — use the AI ROI Calculator for your own inputs.]
Estimate your own with the AI ROI Calculator.
Building a credible AI business case
Define the metric before you build, measure a baseline, run a pilot, and compare results against the baseline. A credible case is honest about costs (including change and maintenance), conservative on savings, and tied to a metric leadership already cares about. Under-promise and measure — it builds trust for the next investment.
Estimate your AI ROI
Use Alugence’s free AI ROI Calculator, then book a call to validate the numbers.