Check how many years the one-time cost of an ERP project takes to be repaid by net efficiency savings, and what is left over the period you compare.
This calculator tests whether an ERP project pays for itself and how quickly. Enter the one-time cost of the project, any grant you have actually been approved for (not one you hope to get), and the net yearly saving you expect once the system is stable.
Net yearly saving = hours saved × loaded hourly cost + inventory carrying cost avoided + fewer errors, write-offs or late fees + old systems retired − the increase in yearly software and support cost compared with what you pay today. Count only savings you can trace to a process change; "better visibility" is real but does not belong in this field unless you can price it.
Formula. The payback period is the point where the cumulative saving, growing by the percentage you enter each year, equals the net one-time cost. Net saving over the period = cumulative saving over the years compared − net one-time cost.
Worked example (illustrative). A distributor spends $120,000 on implementation and migration and receives no grant. It expects to save $52,000 a year (1,000 hours at $40 plus $12,000 of inventory carrying cost) while subscriptions rise by $12,000 a year, so the net saving is $40,000. With 2% growth, payback arrives in about 2.9 years and the five-year net saving is roughly $88,000.
Limits. The calculator does not discount future savings, and most savings start months after go-live, not on day one. See the payback worked example for a ramp-up adjustment.
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