The ROI of Individual Software: How to measure the success of your investment

The investment in individual software development is an important business decision. As with any investment, the question arises: does it pay? The Return on Investment (ROI) is the central indicator to answer this question. In this article we will show you how to calculate the ROI of your software investment, which factors influence it and how to maximize it.

What is the ROI?

Return on Investment (ROI) is an indicator that expresses the ratio between the profit of an investment and the cost of this investment. It is expressed as a percentage and allows comparison of different investment options.

The basic ROI formula:

ROI = (profit - investment) / investment × 100%

Or simplified: ROI = net profit / investment × 100%

The components of the software ROI

When calculating the ROI for individual software, both costs and benefits must be carefully covered:

Costs (investment)

Type of costs Description

** Development costs * * Planning, design, programming, testing

**Infrastructure costs * * Server, cloud hosting, licenses

**implementation costs * * Data migration, integration, training

**Maintenance costs * * Current care, updates, support

**Opportunity costs * * Resources bound during introduction

Benefits (winning)

Type of benefit Description

Efficient gains Time saving through automation, less manual work

** Cost savings * * Resolving expensive old systems, reduced license costs

**Sales increase * * New business models, better customer experience

**Bugget reduction * * Fewer costs due to errors and rework

**Competitive advantage * * Market share gains, customer retention

Practical example: ROI calculation

Case example: Automation of order processing

**A medium-sized company handles 500 orders per month. Each order requires 30 minutes of manual processing.

Investition:

• Development costs: € 120,000

• Annual maintenance: 15,000 €

Uses (yearly):

• Time savings: 500 orders × 20 min. Savings × 12 months = 2,000 hours

• Cost savings at 50 €/hour: 100,000 €/year

• Error reduction: 20,000 €/year

• Total: € 120,000/year

ROI in the first year:

-11 %

(investment not yet amortized)

ROI after 3 years:

+100 %

(investment doubled)

ROI after 5 years:

+200 %

(Investition tripled)

Important: The time horizon

The ROI of individual software is often only shown after 1-2 years. Unlike short-term investments, software is a long-term asset that creates value for years. The amortization time (Break-even) is typically 12-24 months.

Factors that maximize ROI

• ** Clear Requirements:** Avoid Scope Creep and Repairs

• Focus on high-impact features: Priorize functions with the greatest commercial value

• User acceptance: A software that