Worked example
50 payees, 40 admin hours and 10 dispute hours per monthly pay period at $60 an hour, a 1% error rate on $3,000,000 of annual payout, a 70% reduction in hours and errors, $30,000 a year of software and $15,000 to implement.
| Input | Value |
|---|---|
| Number of payees | 50 |
| Admin hours per pay period | 40 |
| Dispute and query hours per pay period | 10 |
| Loaded hourly cost of that time | $60.00 |
| Pay periods per year | 12 |
| Estimated payout error rate | 1% |
| Annual variable payout | $3,000,000.00 |
| Expected reduction in manual hours | 70% |
| Expected reduction in payout errors | 70% |
| Annual software cost | $30,000.00 |
| One-time implementation cost | $15,000.00 |
| Result | Value |
|---|---|
| Net annual savings | $16,200.00 |
| Annual cost of manual administration | $36,000.00 |
| Manual cost per payee per year | $720.00 |
| Potential annual cost of payout errors | $30,000.00 |
| Gross annual savings (before software cost) | $46,200.00 |
| Payback of implementation | 11.1 mo |
| First-year ROI | 2.67% |
- Manual hours per year: (admin + dispute) × periods: 600
- Manual cost: hours × hourly cost: $36,000.00
- Error cost: error rate × annual payout: $30,000.00
- Time savings: manual cost × time reduction: $25,200.00
- Error savings: error cost × error reduction: $21,000.00
- Net annual savings: gross savings − software cost: $16,200.00
- Payback: implementation ÷ (net savings ÷ 12): 11.1 mo
- First-year ROI: (gross − software − implementation) ÷ (software + implementation): 2.67%
Formulas
Manual cost = (admin hours + dispute hours) × pay periods × hourly cost
Error cost = payout error rate × annual variable payout
Net annual savings = manual cost × time reduction + error cost × error reduction − software cost
Payback (months) = implementation cost ÷ (net annual savings ÷ 12)
First-year ROI = (gross savings − software cost − implementation) ÷ (software cost + implementation)
Getting honest inputs
- Hours: count everyone involved in a pay period, including finance, sales ops and managers reviewing statements.
- Hourly cost: use a loaded cost (salary plus benefits and overhead) consistently across scenarios.
- Error rate: base it on corrections you actually made in past periods. Leave it blank if you have no data rather than guessing.
- Reductions: software rarely removes all manual work; data cleanup, plan changes and approvals remain. Run a cautious and an optimistic case.
- Software cost: use the quotes you received. We do not quote vendor prices.
Limitations
- Savings are your assumptions, not measured results, and the calculator is vendor-neutral.
- Benefits that are hard to price, such as rep trust or faster plan changes, are left out on purpose.
- Saved hours only become cash if the time is redeployed or hiring is avoided.
See how we evaluate tools on the commission software page and our methodology. Before buying anything, the commission spreadsheet template is a free baseline.
Frequently asked questions
How much time does commission software save?
It depends on your plan complexity, data quality and how much of the process you automate. Enter your own estimate; we do not publish typical savings because we have no sourced data for them.
Why is the payback shown as 0?
Either there is no implementation cost, so nothing needs paying back, or net annual savings are not positive, so it is never paid back. The notes under the result say which case applies.
Should payout errors count as savings?
Only partially. Overpayments can sometimes be recovered and underpayments are owed anyway, so treat the error figure as exposure and use a conservative error reduction.