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On these figures, the costs are larger

On these figures the costs come to $22,500 more than the saving.

• On paper it is worth $120,000 over 3 years.
• What it costs comes to $142,500: every $1 of saving costs $1.19.
• It looks good for the first 9 months and turns negative in month 19.

This is a worked example with illustrative figures, not data about any real person or company. Change any of them in the calculator and the answer changes with them.

How this answer was worked out

Every formula is written out on the formulas page.

What the calculator asks you

• The expected saving each year
• The one-time cost of making the change
• What the thing being changed was earning
• How much of it is affected, and how much of that was truly spare
• Which parts of the business rely on it
• The chance of having to undo it

Related

• Delay replacing equipmentWorked example
• Cut quality checksWorked example
• Cut customer supportWorked example
• Hold less stockWorked example
• The cost of savingThe calculator this example comes from
• Before you decideA checklist of what is worth checking first