Count the full cost
A sensible monthly estimate includes:
- Subscriptions and usage-based charges.
- Setup and ongoing maintenance.
- Staff time spent learning and adjusting the workflow.
- Time spent checking, editing and correcting output.
- Security, privacy and approval requirements.
- Any extra support or vendor costs.
Some providers charge per user, usage, action or data volume. Compare current terms directly. Don't build a financial case using a promotional rate that will expire.
Measure the benefit that matters
Useful measures include time spent per task, rework, turnaround time, customer satisfaction, conversion quality and contribution after costs. Avoid counting the same benefit twice. Faster proposals and additional sales might be related, but you need evidence that the improved process caused the change.
If staff save three hours but use that time for other work, you may have gained capacity rather than immediately reduced expenditure. That can still be valuable, but describe it accurately.
Worked example: the $120 tool
Fictional example. All amounts in Australian dollars. A small agency trials a tool costing $120 per month. Before AI, staff spend 20 hours monthly drafting a certain class of approved internal reports. With AI, drafting takes seven hours, checking takes five, and troubleshooting takes one. The total is 13 hours, saving seven hours.
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At an estimated internal labour value of $45 per hour, the capacity value is $315. Subtract the $120 fee and the remaining illustrative benefit is $195 per month, before one-off setup, tax, additional risk and any impact on quality.
That is not $195 in guaranteed cash savings. It is an estimate of released staff time at an assumed rate. If quality deteriorates or the work has no alternative use, the business case changes.
A simple calculation
Monthly time benefit = (time previously used − time now used, including review) × justified hourly value.
Net monthly benefit = monthly time benefit + defensible additional benefit − all recurring AI costs.
Keep one-off implementation costs separate, then estimate how long a positive monthly benefit would take to recover them. If the savings vary substantially, use a conservative case as well as the optimistic one.
What would make the tool not worth it?
An expensive integration, unreliable outputs, hidden staff checking time, data restrictions or customer errors can wipe out the headline saving. Review what happens when the volume doubles or the most experienced reviewer is away. A tool that only works because one employee fixes every output may not scale.
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Lesson: How Much Does AI Cost, and Is It Worth It?. Please do not include confidential client, financial, health or staff information.
Questions this lesson answers
Is free AI always better value than paid AI?
No. Consider usage restrictions, security settings, quality, admin effort and the business's actual needs. A free option that creates more corrections may cost more in practice.
Can AI increase revenue?
It can support activities that influence revenue, such as clearer proposals and faster responses. Do not attribute revenue growth to AI without considering other changes and comparing suitable evidence.
Work out where your business is getting stuck
The free Growth Diagnostic asks ten questions across acquisition, conversion, relationships, delivery and commercial control. It gives you an area to investigate and three things you can do next.
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