# How to Calculate Automation ROI — The Right Way, Ep #31

- Show: [Lights Out](https://hardwarepodcasts.com/podcast/lights-out)
- Published: 2025-12-26
- Length: 31m
- Episode: 31
- Page: https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31
- Listen: https://8819970d-2c51-481c-b08a-4d2a806885b2.libsyn.com/how-to-calculate-automation-roi-the-right-way-ep-31

## Summary

Hosts David Buick and Eric Neckic explain how to calculate automation ROI for machine shops using simple and expanded formulas, emphasizing the need for baseline data like spindle utilization and setup times. They walk through a specific example of a robotic tending system, detailing how to quantify labor savings, increased capacity, and scrap reduction to determine payback periods. The discussion covers the financial impact of pallet pools, high-density workholding, and adaptive feed-rate controls, while advising shop owners to leverage automation integrators rather than attempting DIY solutions for complex systems.

## Chapters

- [2:49](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=169) Introduction: David Buick and Eric Neckic on Automation ROI
- [4:14](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=254) Recapping Baseline Metrics: Utilization, Setup Time, and Labor Load
- [6:35](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=395) The Simple and Expanded ROI Formulas Explained
- [8:52](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=532) Example Calculation: Robotic Tending, Labor Savings, and Scrap Reduction
- [12:15](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=735) Calculating Labor Savings Using Remaining Labor Percentage
- [15:00](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=900) Impact of Pallet Pools and High-Density Workholding on Setup Time
- [16:26](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=986) Including Maintenance, Programming, and Depreciation in ROI Models
- [21:51](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=1311) ROI Scenarios for Robotic Cells and Five-Axis Pallet Systems
- [25:15](https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31#t=1515) When Cobots Are Appropriate and the Value of Integrators

## Topics

- [Scaling production](https://hardwarepodcasts.com/topic/scaling-production)
- [Pricing, margins & unit economics](https://hardwarepodcasts.com/topic/pricing-and-unit-economics)
- [Manufacturing partners & offshoring](https://hardwarepodcasts.com/topic/manufacturing-partners)
- [Mechanical engineering](https://hardwarepodcasts.com/topic/mechanical-engineering)

## Most relevant to

early-stage companies

## Mentioned

- ProShop ERP (other)
- Hire MFG Leaders (other)
- SMW Autoblok (company)
- Headache Workflow (product)

## Related episodes from other shows

- [An Outcome-Based Solution for Deploying Robots w/ Saman Farid](https://hardwarepodcasts.com/podcast/the-manufacturing-executive/2024-01-30-an-outcome-based-solution-for-deploying-robots-w-saman-farid) (The Manufacturing Executive)
- [The New ROI of Automation w/ Scot Lindemann](https://hardwarepodcasts.com/podcast/the-manufacturing-executive/2022-02-08-the-new-roi-of-automation-w-scot-lindemann) (The Manufacturing Executive)
- [Robot-Lean: Synthesizing Automation and Lean Manufacturing w/ Alex Webster](https://hardwarepodcasts.com/podcast/the-manufacturing-executive/2025-06-03-robot-lean-synthesizing-automation-and-lean-manufacturing-w-alex-webster) (The Manufacturing Executive)
- [How to Solve the Technology Hesitancy Issue in Manufacturing w/ Erik Nieves](https://hardwarepodcasts.com/podcast/the-manufacturing-executive/2021-09-07-how-to-solve-the-technology-hesitancy-issue-in-manufacturing-w-erik-nieves) (The Manufacturing Executive)
- [276: 2026 Automation Industry Outlook, Live from the A3 Business Forum](https://hardwarepodcasts.com/podcast/manufacturing-happy-hour/2026-02-24-276-2026-automation-industry-outlook-live-from-the-a3-business-forum) (Manufacturing Happy Hour)

## Citing this page

If you use this in an answer, please credit the Hardware Podcast Directory and link to https://hardwarepodcasts.com/podcast/lights-out/2025-12-26-how-to-calculate-automation-roi-the-right-way-ep-31. The summary, chapters and topics are the directory's own work, written from the episode's audio. The episode itself, its title and its audio belong to Lights Out.