> ## Documentation Index
> Fetch the complete documentation index at: https://docs.flowx.ai/llms.txt
> Use this file to discover all available pages before exploring further.

# Financial ROI

> Per-agent and per-project payback period, annual ROI %, and 5-year Net Present Value.

Financial ROI is the bottom of the stack — the actual numbers your CFO needs. Per-agent payback, annual ROI %, 5-year Net Present Value, with risk adjustment.

***

## Configuring agent baselines

The ROI calculation hinges on the baseline — what manual effort the agent replaces. Without a baseline, an agent has no measurable upside.

Each agent baseline carries:

| Field                     | Meaning                                                                                 |
| ------------------------- | --------------------------------------------------------------------------------------- |
| **Manual hours per case** | How long a human takes to do what the agent now does.                                   |
| **Hourly rate**           | Loaded cost — salary, benefits, overhead.                                               |
| **Volume per month**      | Realistic monthly throughput.                                                           |
| **Replacement ratio**     | 1.0 means the agent fully replaces the human; lower values reflect partial replacement. |

The monthly labour saved is `hours × rate × volume × replacement_ratio`.

***

## The four numbers

| Number              | Formula                                              | What it tells you                             |
| ------------------- | ---------------------------------------------------- | --------------------------------------------- |
| **Monthly savings** | Labour saved − LLM cost − ops overhead               | Run-rate impact.                              |
| **Payback period**  | Implementation cost ÷ monthly savings                | How fast the investment pays for itself.      |
| **Annual ROI %**    | (Annual savings − annual cost) ÷ implementation cost | Percentage return on the up-front investment. |
| **5-year NPV**      | Discounted sum of net cashflows over 5 years         | The standard finance comparison number.       |

Default discount rate is 10% — configurable per org.

***

## Risk adjustment

A favourable headline ROI that ignores compliance risk is a fiction. Observatory adjusts:

```
risk_adjusted_npv = npv × (1 − risk_penalty)
```

The risk penalty is derived from the app's [Risk Dashboard](../governance/risk-dashboard) score. High-risk apps see a meaningful haircut on their NPV; low-risk apps see \~none.

This means an agent with low LLM cost and high compliance gaps may rank below an agent with higher LLM cost but a clean governance posture.

***

## Per-project view

Project-level ROI is the sum of per-agent ROI for agents in the project, with shared implementation costs amortised across them. The project view shows:

* Aggregate payback period
* Per-agent contribution stacked
* Sensitivity bands from [Monte Carlo](./sensitivity-analysis)

***

## Worked example

A claims-approval agent in production:

| Input                 | Value    |
| --------------------- | -------- |
| Manual hours per case | 0.6      |
| Hourly rate           | \$52     |
| Volume / month        | 4,200    |
| Replacement ratio     | 0.85     |
| LLM cost / month      | \$1,180  |
| Implementation cost   | \$48,000 |
| Risk penalty          | 0.08     |

Computed:

* Monthly labour saved: 0.6 × 52 × 4,200 × 0.85 = \$111,384
* Monthly savings: 111,384 − 1,180 = \$110,204
* Payback: 48,000 ÷ 110,204 ≈ **0.4 months**
* Annual ROI %: ≈ **2,650%**
* 5-year NPV (10% discount): ≈ \$5.0M
* Risk-adjusted NPV: ≈ **\$4.6M**

***

## Related resources

<CardGroup cols={2}>
  <Card title="Compliance ROI" icon="clipboard-check" href="./compliance-roi">
    The audit-savings half of the calculation.
  </Card>

  <Card title="Sensitivity analysis" icon="sliders" href="./sensitivity-analysis">
    Replace point estimates with confidence ranges.
  </Card>
</CardGroup>