Define the inputs
Record monthly preparation time, number of recipients, per-recipient work, follow-up work and record organization. For the proposed process, include source-file preparation, recipient checks, exceptions and assistance.
Keep measured time separate from estimates. Enter actual supplier charges, relevant channel costs and contract conditions rather than borrowing a historical quote from another customer.
Use a transparent calculation
Monthly current hours = preparation hours + (recipients × handling minutes per recipient ÷ 60) + follow-up hours + record hours.
Monthly proposed hours = preparation and checks + exception handling + follow-up + record work.
First-year current cost = 12 × current monthly hours × internal hourly cost + annual direct costs.
First-year proposed cost = 12 × proposed monthly hours × internal hourly cost + annual service and channel costs + one-time migration and training cost.
Estimated first-year difference = current cost − proposed cost.
The internal hourly cost is a planning input. A positive difference is not automatically cash released from the business.
Worked example: fictional inputs
Assume 120 monthly recipients. The existing process uses one preparation hour, two minutes per recipient, one follow-up hour and half an hour organizing records. That is 6.5 hours per month.
Assume a tested alternative uses three hours per month. At an illustrative internal cost of USD 20 per hour, the annual labor-cost difference is 3.5 × 12 × 20 = USD 840.
With an illustrative USD 480 annual service cost and USD 160 one-time setup cost, the first-year estimated difference is USD 200, assuming no other direct costs.
These are fictional numbers, not SugarHR prices or a customer result.
Test a less favorable scenario
If the same alternative instead requires five monthly hours, the labor-cost difference becomes USD 360 per year. After the same USD 640 service and setup costs, the first-year difference is negative USD 280.
That result may mean the new process is not justified on workload alone. Other requirements can still matter, but describe them separately instead of assigning them an invented financial value.
Check the assumptions that change the answer
Test recipient maintenance, assistance and records using your own sample. Include time spent adapting difficult spreadsheets. Review first-year and later-year costs separately, and check the actual total commitment rather than only an annualized discount.