WMS payback calculator

Separate capacity from cash

Enter the one-time investment in software setup, integration, training, and equipment. Enter annual net cash savings after subtracting all new recurring expenses. Time released for other work is capacity; it becomes a cash saving only when overtime, temporary labor, or another actual expense is avoided. Do not treat every saved minute as payroll removed.

The simple payback formula is initial cost divided by annual net cash saving. Cumulative net benefit is annual net cash saving multiplied by the evaluation horizon, less the initial cost. This model assumes a full, constant annual benefit from the start and does not discount future money.

Illustrative example

A $30,000 project with $12,000 annual net cash savings has a 2.5-year simple payback. Across three years, $12,000 × 3 − $30,000 = $6,000 cumulative net benefit. Neither the project cost nor the saving is a market benchmark. Replace both with your own documented assumptions.

Read the downside

Run the calculation again with a lower annual benefit and a higher project cost. Zero savings means there is no payback; a zero investment needs no recovery. The horizon is a whole number from 1 to 20 years. If the project creates a net annual expense, use a separate cash-flow analysis rather than entering a negative value. Delayed rollout, taxes, financing, changing volumes, and the value of capital are outside this simple model.