Cost Benefit Analysis Calculator
Use this simple calculator to determine the potential financial outcome of a project or decision by comparing its total estimated costs against its total estimated benefits.
Enter the sum of all costs and the sum of all benefits in their respective fields below. Ensure your inputs use a consistent currency unit.
Enter Your Costs and Benefits
Understanding Cost Benefit Analysis (CBA)
What is CBA?
Cost Benefit Analysis (CBA) is a technique used to compare the total costs of a project or decision against its total benefits. The goal is to determine if the benefits outweigh the costs and to what extent. It helps in making informed decisions by providing a structured way to evaluate the financial feasibility.
Net Benefit Calculation
The core of a simple CBA is calculating the Net Benefit, which is simply:
Net Benefit = Total Benefits - Total Costs
- If Net Benefit > 0: The project/decision is financially beneficial.
- If Net Benefit < 0: The project/decision incurs a net cost.
- If Net Benefit = 0: The project/decision breaks even.
While this calculator provides the basic calculation, a full CBA often involves quantifying intangible benefits, discounting future values, and considering risks.
Cost Benefit Analysis Examples
Explore these examples to see how different scenarios play out:
Example 1: Small Software Upgrade
Scenario: Upgrading a software license for a team.
Costs: $500 (license fee) + $100 (installation time) = $600
Benefits: $900 (estimated value of productivity increase over a year)
Calculation: $900 - $600 = $300
Result: Net Benefit: $300.00 (Positive)
Example 2: Marketing Campaign
Scenario: Running a limited online advertising campaign.
Costs: $800 (ad spend) + $150 (campaign setup time) = $950
Benefits: $700 (estimated profit from resulting sales)
Calculation: $700 - $950 = -$250
Result: Net Cost: $250.00 (Negative)
Example 3: Employee Training
Scenario: Sending an employee to a workshop.
Costs: $1000 (course fee) + $400 (value of lost work time) = $1400
Benefits: $1400 (estimated value of improved skills and efficiency over 6 months)
Calculation: $1400 - $1400 = $0
Result: Net Benefit: $0.00 (Break Even)
Example 4: Installing Solar Panels (Simplified)
Scenario: Basic CBA for installing residential solar panels.
Costs: $15,000 (installation cost after incentives)
Benefits: $25,000 (estimated value of electricity savings over the system's life)
Calculation: $25,000 - $15,000 = $10,000
Result: Net Benefit: $10,000.00 (Positive)
Example 5: Purchasing New Equipment
Scenario: Buying a new machine for a factory.
Costs: $50,000 (purchase price) + $2,000 (installation) + $1,000 (training) = $53,000
Benefits: $45,000 (estimated value of increased output and reduced labor over the machine's life)
Calculation: $45,000 - $53,000 = -$8,000
Result: Net Cost: $8,000.00 (Negative)
Example 6: Offering a New Service
Scenario: Introducing a small new service offering.
Costs: $300 (setup) + $200 (marketing) + $500 (initial labor) = $1000
Benefits: $1800 (estimated revenue from new service)
Calculation: $1800 - $1000 = $800
Result: Net Benefit: $800.00 (Positive)
Example 7: Repair vs. Replace Decision (Simple)
Scenario: Deciding whether to repair an old car vs. the immediate cost of replacing it (ignoring future benefits/costs for simplicity).
Costs: $3000 (estimated repair cost)
Benefits: $0 (no new benefits from repair, just maintains existing state)
Calculation: $0 - $3000 = -$3000
Result: Net Cost: $3000.00 (Negative for this single transaction)
Example 8: Investing in Website SEO
Scenario: Hiring an SEO consultant.
Costs: $2500 (consultant fee)
Benefits: $4000 (estimated value of increased organic traffic and conversions over a year)
Calculation: $4000 - $2500 = $1500
Result: Net Benefit: $1500.00 (Positive)
Example 9: Renting vs. Buying a Tool (Short Term)
Scenario: Need a specific tool for a single job.
Costs: $50 (tool rental fee)
Benefits: $0 (assuming the benefit is simply completing the job, not quantifiable profit *from the tool itself* in this simple view)
Calculation: $0 - $50 = -$50
Result: Net Cost: $50.00 (Negative, as expected for a simple rental cost without revenue benefit)
Example 10: Implementing a Time-Saving Process
Scenario: Investing time/resources to streamline a process.
Costs: $1200 (value of time spent analyzing and implementing)
Benefits: $1200 (estimated value of cumulative time saved by staff over 6 months)
Calculation: $1200 - $1200 = $0
Result: Net Benefit: $0.00 (Break Even)
Frequently Asked Questions about this CBA Calculator
1. What exactly should I include in "Total Costs"?
Include all relevant expenses associated with the project or decision. This can be direct costs (labor, materials, fees) and indirect costs (overhead allocation, estimated value of time spent planning). Try to quantify negative impacts financially if possible (e.g., disruption cost).
2. What should I include in "Total Benefits"?
Include all positive financial outcomes. This is typically increased revenue or cost savings. You might also include intangible benefits that you have assigned a monetary value to (e.g., value of increased customer satisfaction, value of time saved).
3. How is the "Net Benefit" calculated?
The calculator performs a simple subtraction: Total Benefits minus Total Costs. The result shows the overall financial gain or loss based on your inputs.
4. What does a positive result mean?
A positive Net Benefit indicates that your estimated benefits are greater than your estimated costs, suggesting the project is financially worthwhile based on your analysis.
5. What does a negative result mean?
A negative Net Benefit (shown as "Net Cost") indicates that your estimated costs are greater than your estimated benefits, suggesting the project might not be financially viable based on your analysis.
6. What does a result of zero mean?
A Net Benefit of $0.00 means your estimated costs equal your estimated benefits, indicating a break-even point.
7. Can I use currencies other than dollars?
Yes, the calculator works with any numbers. Just be consistent! If you enter costs in Euros, enter benefits in Euros. The result will be in the same currency unit.
8. Is this a full, comprehensive CBA?
No, this is a very basic calculator for the core calculation. A full CBA often involves more complex steps like identifying all potential costs/benefits (including intangibles), assigning monetary values, discounting future values to present value, and performing sensitivity analysis. This tool assumes you have already done the work to sum up your total estimated costs and benefits.
9. What inputs will cause an error?
The calculator requires you to enter valid numbers in both the Total Costs and Total Benefits fields. Leaving a field empty or entering non-numeric text will result in an error message.
10. Why is it important to be thorough in identifying costs and benefits?
The accuracy of the calculator's output is entirely dependent on the accuracy and completeness of the costs and benefits you enter. Missing significant items will lead to a misleading Net Benefit figure.
