What’s Your Project Really Worth?

The return on investment (ROI) of a software project can be complicated, especially if you try to calculate it down to the exact penny. However, this level of detail isn’t necessary, and I don’t recommend aiming for it.

Instead, focus on getting in the right ballpark. Personally, I focus on the first digit and the number of digits. This approach allows for a reasonable estimate, especially when the project has clear and measurable objectives.

For your project, you can start by quantifying the potential benefits in monetary terms:

• New Report: How many staff hours are saved by automating this process? What is the value of that time over a year?
• New Product Feature: Have similar features increased user counts in the past? What do you expect from this feature, and what are those new users worth to the business?
• Bug Fixes: How has customer retention fluctuated compared to bug rates in the past? What does this translate as a yearly cost?
• Bug Fixes: Have customer retention rates fluctuated alongside bug rates before? How does this affect annual revenue or costs?

By comparing the cost of a software change to the value it delivers, you can better evaluate whether the project is worth pursuing.

For instance, automating a report that saves a $40/hour employee 4 hours a week translates to around $7,700 in salary savings per year. Once you add benefits and taxes, the value likely jumps to $10,000–$15,000 annually.

This method of looking at the value produced by a project gives you an upper limit for what the project should reasonably cost.