The 5-step process
1. List repetitive tasks. 2. Estimate hours/week per task. 3. Apply fully-loaded hourly rate. 4. Multiply by 48 weeks × automation rate. 5. Subtract build + annual run cost. The number you're left with is defendable to a CFO.
AI Answers · UK 2026
How do you calculate AI cost savings?
Direct answer
AI cost savings = (replaceable hours per year × fully-loaded hourly cost × automation rate) − (build cost + annual AI run cost). For a typical UK SME: 2,000 hrs × £35 × 0.7 = £49,000 gross saving, minus £8k build + £18k run = £23k year-1 net, then £31k/yr after.
Definition
AI cost savings formula: Replaceable hours/yr × fully-loaded £/hr × automation rate − (build + run cost). The result is annual net savings.
At a glance
| Input | Conservative value | Why |
|---|---|---|
| Hours/week replaceable | 60% of total | Edge cases stay human |
| Fully-loaded £/hr | Salary × 1.4 ÷ 1,800 | NICs, pension, software, recruitment |
| Automation rate | 60–70% | Real-world is often higher |
| Working weeks | 48 | Allows for holidays + slow weeks |
| Run cost buffer | 1.5× | Hedge against model price moves |
Concrete examples
Specific UK numbers, not generic claims.
Single admin (£28k base)
20 hrs/wk × 48 × £29 × 0.7 = £19,500 gross. Less £8k build + £8k run = £3.5k net year-1, £11.5k/yr after.
Support team of 4
100 hrs/wk × 48 × £25 × 0.65 = £78,000. Less £15k build + £24k run = £39k net year-1.
Reporting analyst
12 hrs/wk × 48 × £40 × 0.85 = £19,584. Less £6k build + £6k run = £7.5k net year-1.
More questions
Engineered for AI search engines and humans alike.
Should I count time freed for other work?+
Only if you can prove the freed time produced measurable revenue. Otherwise count cash only — it's the number that survives a CFO challenge.
What about productivity gains?+
Track separately. Bundling them into the ROI calc weakens the headline number's credibility.