Should extra output count as return in a capital request?

Only as contribution margin on units you will sell. Throughput accounting counts sales less totally variable cost, and only when a sale happens. Output that sits in the warehouse is inventory, so the page also shows ROI and payback without it.

What counts as labor savings for an automation project?

Paid hours that disappear: removed positions, overtime you stop paying or temporary staff you release, times the burdened rate. Operators moved to other work are capacity, not savings.

Why is finance's ROI for this project lower than mine?

Often because theirs is after depreciation and tax. This page shows a pretax cash return; an accounting return subtracts yearly depreciation, and often tax, from the benefit first.

How do I value energy savings?

Multiply the kWh saved per year by your blended electricity rate, and add gas or compressed air savings the same way. Subtract any energy the new equipment itself uses.

Costing calculator

Manufacturing ROI Calculator

Check the annual return and payback on an automation, tooling or process project before it goes to your capital committee. You need the installed cost, each yearly savings stream and the maintenance the project adds.

What this calculator does

Annual cash return and payback on an improvement project, and how much of it depends on selling extra output.

Formula used

Gross annual benefit = labor + scrap + energy savings + throughput benefit
Net annual benefit = gross annual benefit − added annual maintenance
Annual ROI = net annual benefit ÷ investment × 100; payback = investment ÷ net annual benefit
Without throughput: the same two rows with throughput benefit set to zero
Throughput share = throughput benefit ÷ gross annual benefit × 100

Inputs explained

Project Investment: Installed cost: equipment, tooling, integration, installation and training.
Annual Labor Savings: Paid hours removed per year × burdened labor rate.
Annual Scrap Savings: Scrap and rework cost avoided per year, from measured scrap rates.
Annual Energy Savings: kWh saved per year × your blended electricity rate.
Annual Throughput Benefit: Extra units you will sell × contribution margin, not revenue.
Added Annual Maintenance: Service, spares and consumables the project adds each year.

How to use the result

Best suited to capital request for a robot or automation cell, checking a vendor's ROI claim.
Ignores project life: a return that ends after two years scores the same as one lasting ten. Payback should not rank competing projects; compare those on net present value.

Current U.S. benchmarks

U.S. manufacturing runs at 75.7% of capacity (Federal Reserve, Aug 2026). New factory orders are up 8.5% year over year (Census).

Common questions

Should extra output count as return in a capital request? Only as contribution margin on units you will sell. Throughput accounting counts sales less totally variable cost, and only when a sale happens. Output that sits in the warehouse is inventory, so the page also shows ROI and payback without it.
What counts as labor savings for an automation project? Paid hours that disappear: removed positions, overtime you stop paying or temporary staff you release, times the burdened rate. Operators moved to other work are capacity, not savings.
Why is finance's ROI for this project lower than mine? Often because theirs is after depreciation and tax. This page shows a pretax cash return; an accounting return subtracts yearly depreciation, and often tax, from the benefit first.
How do I value energy savings? Multiply the kWh saved per year by your blended electricity rate, and add gas or compressed air savings the same way. Subtract any energy the new equipment itself uses.

Related guides

Last reviewed 2026-10-01.