Payback Period
How long until this investment pays for itself? You're spending $8k on a tool or $3k/month on a hire. Payback period is how long it takes for an investment to pay for itself. E.g. "Hiring an assistant will pay for itself in 6 months through time freed up." It's a simple way to decide if an investment is worth it—and to set a date when you'll check. If payback is 6 months, you review at 6 months: did we get the return we assumed?
Same investment, different payback. A tool that costs $200/month and saves 4 hours of your time (at $150/h) pays back in about 1.3 months. A hire at $3k/month who frees 15 hours (at $200/h) generates $3k of value per month—payback in month 1. If the hire only frees 5 hours, value = $1k; payback stretches to 3 months—and you might question the design. Payback period forces you to state the assumption (what will we get back?) and to revisit it. It pairs with ROI and break-even analysis.
How long until the investment pays for itself? State the assumption; set a review date.
How to use it
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State the cost. Total or monthly. For a hire, use labor burden so the cost is real.
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State the return. What will we get back, per month? E.g. "15 hours freed at $200/h = $3k/month." Or "2 more proposals closed per quarter = $30k revenue."
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Calculate payback. Cost ÷ monthly return = months to payback. Set a calendar reminder: at that date, did we get the return? If not, adjust the use of the investment or the assumption.