The ROI of individual software: How to measure success

The investment in custom software development is a major 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. This 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

Learn how to calculate and maximize return on investment (ROI) of your custom software solution.

For The ROI of custom software: How to measure success, see Cost Calculator: Software Development und Our Development Process on our website for rollout paths and planning.

When calculating the ROI for custom 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

**rollout 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 study: Automation of order processing **A midsize 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

Short: The ROI of custom software is often only shown after 1-2 years.

The ROI of custom 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 Needs:** Avoid Scope Creep and Repairs

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

• **Sustainable

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Sources: Unless cited inline, market figures and percentages are for orientation. See public sources such as Bitkom (2025) and Destatis.

Project budgets and examples: Groenewold IT Solutions, internal reporting 2026.

References and further reading

The following separate references complement the topics in this article:

• Bitkom – German digital industry association.
• German Federal Office for Information Security (BSI).
• European Commission – Digital strategy.
• MDN Web Docs (Mozilla)
• W3C – World Wide Web Consortium.

"DevOps is less about tools and more about shared ownership of quality and release discipline."

— Björn Groenewold, Managing Director, Groenewold IT Solutions

Frequently Asked Questions (FAQ)

What is this article about: “The ROI of individual software: How to measure success”?

This article sums up practical aspects of The ROI of custom software. How to measure success for leaders and delivery teams. In short.

Learn how to calculate and maximize return on investment (ROI) of your custom software solution. With concrete examples and calculation formulas.

Who benefits most from the content described here?

It is especially relevant for firms in Software development that need reliable systems, clear interfaces, and predictable delivery — from mid-market teams to expert departments.

How does this topic fit into an IT or digital strategy?

You can map the topic to service building blocks such as custom software and delivery support. Architecture reviews and stepwise rollout reduce risk and rework.

For multi-system landscapes, IT consulting and architecture helps align vendors and internal teams.

What are sensible next steps if we need support?

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