# The ROI case for the finance director > Total cost of ownership and payback in the buyer's own numbers, with every assumption flagged and a range instead of one hopeful figure. - Course: [B2B Marketing and Sales: Win Your First Company Customers](https://productovi.com/courses/b2b-marketing-and-sales.md) - Module: Proposal and price - Lesson 22/32, ~24 min - Source: https://productovi.com/courses/b2b-marketing-and-sales/the-roi-case ## Yaryna's two questions **Pavlo:** Yaryna read the page. She liked that it starts with us. Now she asks two things: what will this cost Veloria in total, and when do we get the money back? **Sofia:** I've seen articles saying language training returns several times its cost. I'll cite one of those. **Alex Tutor:** Whose training, in which company, measured how? A borrowed figure is the first thing a finance director crosses out. Build the case from Veloria's own numbers, and let her check every line. **Alex Tutor:** That's an **ROI case**: what the buyer spends and what the buyer gets back, in the buyer's terms. It's a calculation, not a brochure. > **Exercise:** Which source of numbers should carry Veloria's ROI case? ## What it really costs Veloria **Marta:** Our fee first: 300 lessons a month for twelve months at 800 UAH. That's 2,880,000 a year. **Alex Tutor:** Yaryna counts more than our invoice. That's the **total cost of ownership**: everything Veloria spends to make the program work, including its own people's time. **Pavlo:** About half the lessons fall in paid hours, and an hour of a dispatcher's time costs us roughly 300 UAH with taxes. My coordination and the IT check, call it 80,000 for the year. **Alex Tutor:** Work out the staff-time line before we add it all up. > **Exercise:** Veloria's program is **3,600** lesson hours a year; about **half** fall in paid hours, and an hour of a dispatcher's time costs Veloria about **300 UAH** with taxes. What does that paid time cost Veloria a year, in UAH? **Sofia:** So 1,800 paid hours times 300 is 540,000. With the fee and Pavlo's 80,000, the total is 3,500,000. Doesn't that make us look more expensive? **Alex Tutor:** She'll add those costs anyway. If you add them first, she sees you understand her side, and she stops looking for what you left out. > **Exercise:** Which items belong in Veloria's total cost of ownership for the program? Select all that apply. ## Benefits as a range **Pavlo:** Stepan's log shows about 8 language-related incidents a month, roughly 50,000 each in fees and delays. The forty lose about 3 hours a week each to English. Translation runs 50,000 a month. **Alex Tutor:** A year: incidents 4,800,000, lost hours 40 × 3 × 48 weeks × 300 = 1,728,000, translation 600,000. Training won't remove all of it. How much it removes is an assumption, so give a range. **Marta:** Agreed with Stepan and Pavlo: the low case cuts incidents and translation by half and lost hours by a third; the high case by 80% and two thirds. **Alex Tutor:** Low: 2,400,000 + 576,000 + 300,000 = 3,276,000. High: 3,840,000 + 1,152,000 + 480,000 = 5,472,000. Against a cost of 3,500,000. > **Exercise:** Total cost of ownership is 3,500,000 UAH; the year's benefit is 3,276,000 in the low case and 5,472,000 in the high case. What is the net result for Veloria? ## ROI and payback $$ \text{ROI} = \frac{B - C}{C} \qquad \text{payback} = \frac{C}{B / 12} $$ *B: the year's benefit, C: the total cost of ownership. Payback in months, treating the year's cost as one budget.* **Alex Tutor:** Try the high case yourself with the formula. > **Exercise:** High case: the year's benefit is **5,472,000 UAH** and the total cost of ownership is **3,500,000 UAH**. Using ROI = (B − C) ÷ C, what is the ROI, in percent? **Alex Tutor:** ROI says how much: from −224,000 ÷ 3,500,000 = −6.4% to 1,972,000 ÷ 3,500,000 = +56.34%. Payback says how soon: 12.82 months in the low case, 7.68 in the high one. **Sofia:** The low case is negative. Can't I just show the middle and leave that out? **Alex Tutor:** Good question. Decide first: true or false? > **Exercise:** **True or false:** an ROI case is more persuasive if it shows only the middle case and leaves out a low case with a negative ROI. **Alex Tutor:** No. Yaryna will find it, and then she'll doubt every other line. Shown openly, it tells her what to watch: the program pays back within the year unless the incident line moves less than you both hoped. **Marta:** One number would just be a guess with decimals. A range with its reasons is something she can defend to the board. > **Exercise:** Match each term with what it tells Yaryna. ## Assumptions in the open **Alex Tutor:** Under the numbers, list every assumption and who gave it: 300 UAH an hour from Pavlo, 8 incidents a month from Stepan's log, the cut shares agreed in this meeting. **Sofia:** Which one matters most? **Alex Tutor:** Look at how far each line swings between low and high. Incidents move by 1,440,000, hours by 576,000, translation by 180,000. Measure incidents first, from the first quarter. **Pavlo:** Stepan already logs them. If your report puts them next to attendance every month, Yaryna can watch the case come true or not. > **Exercise:** Between the low and the high case, incidents swing by 1,440,000 UAH, lost hours by 576,000 and translation by 180,000. What should the monthly report track first? ## A paragraph for Yaryna **Marta:** Write the summary Pavlo will forward: total cost, the range, payback, and the one assumption that decides it. **Sofia:** Should I round the numbers so it reads easier? **Alex Tutor:** Round in the text, keep the exact figures in the table beneath. And round honestly: −6.4% is «about −6%», not «about zero». **Marta:** And end with how we'll check it. That's what turns a sales document into a plan she can hold us to. > **Exercise:** Write the summary for Yaryna (3–5 sentences): total cost of ownership, the benefit range, ROI and payback, the assumption that decides it, and how you'll check it. Facts: total cost of ownership 3,500,000 UAH a year; benefit 3,276,000 (low) to 5,472,000 (high); ROI −6.4% to +56.34%; payback 12.82 to 7.68 months; language-related incidents from Stepan's log swing the most (1,440,000 between the cases). > **Key ideas** > > - Build the ROI case from the buyer's own numbers; never borrow a benchmark you can't source. > - Total cost of ownership = your fee + the buyer's own costs (staff time, coordination, checks). Veloria: 2,880,000 + 540,000 + 80,000 = 3,500,000 UAH. > - Show benefits as a range with the assumptions that drive it: 3,276,000 to 5,472,000. > - ROI says how much (−6.4% to +56.34%); payback says how soon (12.82 to 7.68 months). > - Show the weak case too, find the assumption that swings most, and offer to measure it from the first month. **Alex Tutor:** Once the numbers are on the table, procurement will try to change them. Next: what a discount really costs us, and what to ask for in return. - Previous lesson: [A quote built from the buyer's economics](https://productovi.com/courses/b2b-marketing-and-sales/a-quote-from-the-buyers-economics.md) - Next lesson: [Discounts and give–get trades](https://productovi.com/courses/b2b-marketing-and-sales/discounts-and-give-get.md) --- Productovi Learning. Free, no sign-up needed to read.