Return on Investment / Payback Period

How long it takes a robot buyer to earn back the purchase cost through the money it saves.

Return on investment (ROI) is the ratio of gain to cost; the payback period is how long it takes cumulative gains to catch up with the initial cost. When a company evaluates whether to adopt robots, it weighs total cost — purchase price, deployment and retrofitting, maintenance, electricity — against the wages of the workers it replaces and any productivity gain. Manufacturers buying industrial robots commonly treat the payback period as a key threshold; humanoid robots today are expensive and still fall short of a skilled worker's efficiency and reliability, so the math often doesn't work out yet, which is why the industry frequently asks whether the ROI “pencils out” as a precondition for scaled deployment. Related figures that affect the return include cycle time (UPH) and mean time between failures.

ExampleIf a robot costs RMB 200,000 in total and replaces one position worth RMB 100,000 a year in wages, the payback period is roughly two years (a simplified estimate that ignores maintenance).

Also called

ROI, Payback Period

Related

Bill of Materials Cost · Cycle Time / Units Per Hour · Scaled Deployment · Machines Replacing Humans · Mean Time Between Failures

Sources

Investopedia: Payback Period