18 min

The Business Case: Costs, Benefits & Payback

Put honest numbers on benefit and cost, test the case and plan how to measure it.

Lesson 3 of 10

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In plain English

A business case puts honest numbers on benefit and cost. Start from a measured baseline and use a low, expected and high case. Count the full cost, including running, review and change. Test the case with cautious numbers, and add a stop rule.

ROI: Return on investment: what you gain compared with what you spend.
Payback: The time until the benefit covers the cost.
Stop rule: A clear point at which you pause or change course.

Picture it

What goes into the business case

Test it with cautious numbers and add a stop rule.

Benefit

Time saved, with a plan for the hours
Fewer errors
More revenue
Lower risk

Full cost

Build, one time
Running, every month
Reviewer and support time
Training and change

Leaders fund projects that show a clear return. A strategist must put honest numbers on both sides: what the project costs and what it earns. This lesson shows how to build a simple business case, which costs people forget, and how to stay honest about uncertainty.

The shape of a business case

A business case answers five questions. What is the problem, and what does it cost today? What will we build? What does it cost to build and to run? What benefit do we expect, and by when? What could go wrong?

Keep it to one or two pages. Use plain numbers a manager can check.

Count the benefit honestly

Start from a baseline you can measure today. Then estimate the change. Use ranges, not single numbers: a low case, an expected case and a high case.

Time saved: tasks per month, times minutes saved per task, times the cost of an hour of that role.
Quality gain: fewer errors, times the cost of fixing each error.
Revenue gain: more leads followed up, times the usual conversion and the value of a sale.
Risk reduced: the chance of a bad event, times its cost. Use this with care, because the chance is hard to know.

⚠Saved hours are only real if something changes. Say what happens to the hours: more work done, less overtime, or fewer hires. Otherwise the saving is only on paper.

Count the full cost

Teams often count only the build. The full cost has more parts. Include all of these.

cost-checklist.md

BUILD (one time)
- People: design, build, testing, security and legal review
- Data work: cleaning, connecting, labelling
- Integration with current systems

RUN (every month)
- AI model usage: input and output tokens, or a per-seat price
- Hosting, search and storage
- Monitoring and support time
- Reviewer time: people who check results
- Updates: prompts, models and rules change, and tests must be rerun

PEOPLE AND CHANGE
- Training and time to learn
- Time lost during the switch
- Ongoing owner and champions

OTHER
- Vendor contracts and minimums
- Insurance, audit or certification costs
- Cost of stopping: how hard is it to switch away?

Model usage costs depend on how much text goes in and out and on the model chosen. Prices change often, so check the current price list. Our calculators on this site can help you estimate a run cost.

Payback and sensitivity

Payback is the time until the benefit covers the cost. Calculate it in months. Then test the case. What if the benefit is half as large? What if usage is double? What if accuracy is lower than hoped? If the case still works in the cautious version, it is strong.

Plan the measuring

Say in advance how you will measure results. Name the number, the source, the person who reports it and the date. A business case with no plan to measure is a wish.

→Put a stop rule in the case: if the number is not at a set level by a set date, we pause or change course. Leaders trust cases that admit they might fail.

Key takeaways

✓A business case answers five questions: problem, build, cost, benefit and risk. Keep it to two pages.
✓Use a measured baseline and ranges. Say what happens to saved hours.
✓Count the full cost: build, monthly run, reviewer time, people change and the cost of switching away.
✓Test the case with cautious numbers, and plan how you will measure the result, with a stop rule.

Hands-on exercise

Build a one-page business case

Choose one use case from your shortlist. Write the baseline: tasks per month, minutes per task and the hourly cost of the role.
Estimate the benefit in a low, expected and high case.
Fill in the cost checklist, with a rough number for each line. Use a calculator from this site for the run cost.
Work out the payback in months for the cautious case. Add a stop rule and the name of the person who will report the result.

Check yourself

Q1Why use ranges instead of one number?show answer

Estimates are uncertain. A low, expected and high case shows how strong the case is if things go worse than hoped.

Q2Name three costs that teams often forget.show answer

Reviewer time, monitoring and support, retesting after changes, training, and the cost of switching away from a vendor.

Q3What is a stop rule?show answer

A clear point at which you pause or change course if results are below a set level by a set date. It makes the case more believable.

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