Short Answer
Start with conservative incremental cash flow, not projected sales alone. Deduct material, labor, energy, maintenance, financing and downtime; include quality and released capacity, then test base, downside and stress cases.
Separate price from investment
Investment includes machine, freight, duties where applicable, site work, installation, tooling, software, training, initial stock, financing and working capital.
Calculate verifiable benefit
Use confirmed demand or explicit probabilities and capacity constrained by uptime and yield. Include scrap, rework, outsourcing and labor savings only when supported.
Build three scenarios
Vary utilization, exchange rate, collection, downtime and consumables. If the downside case fails, change configuration, payment terms or timing.
Track after purchase
Compare monthly good output, cost, downtime, sales and collections with the case. ROI is an operating commitment, not a one-time approval number.
Frequently Asked Questions
ROI versus payback?
ROI relates return to investment; payback measures time to recover cash. Both matter.
Does capacity equal sales?
No. It must be linked to realistic demand, price, collection and probability.
What assumptions are riskiest?
Often utilization, unconfirmed sales, downtime, collection and exchange rate.
Next Step
Build a conservative ROI model before final machinery investment approval.
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