How to Really Understand the ROI of AI

AI ROI - Why this matters

If you’ve been pitched an AI solution, chances are you’ve been promised “productivity,” “automation,” and “cost savings”.

But that’s only half the story, done right, AI can also help:

• Grow your revenue

• Free up your time and your team’s attention

• Improve quality and reduce errors

• Speed up decisions and reduce stress

The challenge then is a way to measure this properly—otherwise, you risk underinvesting in something that could genuinely move the needle.

The basic equation

ROI = (Benefits – Costs) ÷ Costs

Or in simpler terms:

What you gain, minus what you spend, divided by what you spend.

You can use this for any investment—buying a machine, hiring a new person, or bringing in AI.

What counts as a benefit from AI?

Here’s where most people need to reframe their thinking first time around. They only count labour savings. That’s just the beginning.

Let’s break it into four areas of benefit you should be tracking:

Benefit Type

1. Time saved (productivity) Your team does the same work faster, things like AI drafting reports, emails, or proposals.

2. Better results (quality) Fewer mistakes, less rework, more consistent service.

3. More sales (revenue) AI helps personalise marketing, follows up faster, or provides quotations quicker which means more new business.

4. Fewer problems (risk) AI flags issues early, helps you stay compliant, and prevents human slip-ups.

Together, these create the full value picture, not just “lower costs.”

What counts as a cost ?

AI doesn’t have to break the bank, but there are real costs you need to factor in:

Cost Type

1. Setup costs Licences, software subscriptions, getting your data into shape, integration into your existing system.

2. Ongoing costs Monthly platform fees, cloud costs, support or admin.

3. People time You and your team learning new tools, or getting help to set things up properly.

A simple worked example

Let’s say you run a 30 person business turning over $10M.

You decide to use AI to:

• Help sales write proposals faster

• Automate quoting

• Summarise customer calls

• Reduce admin time

Costs (Year 1): (All numbers approximate)

• Setup and licences: $40,000

• Support and usage costs: $30,000

• Total: $70,000

Benefits (Year 1):

• Time saved across 10 team members: ~$100,000

• Better bid quality → win 1–2 extra deals: ~$250,000

• Fewer errors in quoting: ~$30,000 saved

• Total: $380,000

ROI = (380k – 70k) ÷ 70k = 4.4 (or 440%)
Payback time: less than 3 months

What’s often missed (but matters)

Some benefits are harder to put a dollar figure on—but they still count.

Hard to measure...But here’s how to think about it

Freeing up leadership time

If AI saves you 5–10 hours/week, what could you do with that time? New product? Bigger clients?

Better decisions

AI surfaces insights faster—quicker action means beating competitors to the punch.

More innovation

Your team spends less time on grunt work, more time on ideas and improvements.

Talent retention

Teams using modern tools stay longer. Smart people don’t want to work like it’s 2005.

Even if you don’t assign a dollar value, call them out as potential benefits in your proposal or internal business case.

How to build your own AI ROI view

1. List the use cases
   What’s AI going to help you or your team do better, faster, or more often?

2. Estimate time or money saved
   Start small. Even an hour per week saved per person adds up over a year.

3. Add potential revenue
   Can you win more work? Convert faster? Serve more customers?

4. Total your costs
   Include subscriptions, setup time, and anything you’d need help with.

5. Compare benefits to costs
   Use the ROI formula above—or just ask: Will this return more than I’m spending?

Final tips for business owners

• Don’t let ROI rely only on labour savings—focus on growth, quality, and time.

• If you’re not sure, start small. A 6-week AI pilot can show results quickly.

• Consider intangible benefits. Even if they’re hard to measure, they’re often where the biggest wins lie.

• Don’t ignore your own time. If AI gives you back a day a week, it’s probably worth more than anything else.

Want help making the case?

If you’d like to talk through how AI could improve your business and see what a clear ROI plan might look like, get in touch here.

We’ll help you find what’s worth doing—and avoid what’s not.