Strategy
How to calculate the ROI of automation for your practice
A simple, honest framework for estimating what automation is worth to your firm, and for checking afterward whether it delivered.
Automation should earn its keep. Before you invest in any project, you should be able to estimate what it's worth, and afterward you should be able to check whether it delivered. Here's the framework we use with firms. It's deliberately simple, because simple estimates are easier to sanity-check.
Step 1: Measure the hours you have today
Pick one process, such as document collection. Estimate, per season:
- Volume: how many times it happens (for example, 600 clients).
- Time per occurrence: total staff minutes per client spent requesting, chasing, filing, and answering status questions (for example, 45 minutes).
600 clients × 45 minutes = 450 hours per season. Ask the people doing the work. Their estimates are usually closer to reality than a partner's.
Step 2: Estimate the share automation can handle
Very few processes can be automated completely, and the human exceptions matter. A realistic estimate for a well-designed automation is often somewhere between a third and two-thirds of the time, depending on the process. Use a conservative figure. If 50% of those 450 hours are removed, that's 225 hours.
Step 3: Put a value on the hours
Use the fully loaded cost of the people doing the work: salary plus taxes, benefits, software seats, and overhead. If that's $55 per hour, 225 hours is worth about $12,400 per season in direct cost.
That's the conservative view. The fuller view asks what those hours are redeployed to. If freed-up time lets you take on 40 more returns at $600 each without hiring, that's $24,000 in new revenue. If it means no seasonal temp hire, the saving is that hire's full cost.
Step 4: Compare against the full cost
Include the setup fee, the ongoing monthly cost, and the internal time spent on training and testing. Look at payback over 12 to 24 months, not just the first season, since setup costs are front-loaded and savings repeat every year.
| Item | Example |
|---|---|
| Hours saved per season | 225 |
| Value at $55/hour | $12,375 |
| Additional capacity (40 returns × $600) | $24,000 |
| First-year automation cost (setup + monthly) | Compare against your quote |
Step 5: Count what doesn't fit in a spreadsheet
Some of the most important benefits are hard to price: fewer missed deadlines, less burnout, faster turnaround for clients, better data for advisory conversations, and a firm that's easier to hire into. Don't inflate the numbers to include them, but don't ignore them either.
Step 6: Measure afterward
Decide before go-live how you'll measure success: hours logged against the process, turnaround time, number of client follow-ups, or returns per preparer. Compare a season before and after. If an automation isn't paying off, fix it or turn it off.
Want this applied to your firm?
Book a free automation audit and we'll map these ideas onto your actual workflows.