Factory Automation Payback: A Simple Framework to Calculate Your ROI 💰

You do not need a spreadsheet wizard to prove automation pays. Four numbers do the job.

Every factory owner asks the same question before buying a machine: "When does this pay back?" 🤔 The good news is that the answer needs only four numbers—labor, rework, changeover and output. Here is a framework you can complete in about ten minutes, with a worked example using the Mellin Dahao Intelligent Version.

The Four Numbers That Decide 🧮

1. Labor saved—how many operators does the station use, and what do they cost per month?
2. Rework saved—what is the defect rate, and what does reworking it cost in hours and fabric?
3. Changeover saved—how many style changes per month, and how many minutes each?
4. Output gained—how much more can you sell with the station unblocked?

Add the monthly savings, divide the machine price by that number, and you have payback in months.

Worked Example: The Waistband Station 📊

Take a typical trouser line running one waistband station with three operators across two shifts:

• 💸 Labor: 3 operators × $300/month = $900/month saved when one Dahao replaces them
• 🔁 Rework: 8% waistband defect rate × line output × $2/repair ≈ $260/month saved
• ⏱️ Changeover: 6 changes × 25 minutes × $15/minute line cost ≈ $90/month saved
• 📈 Output: 30% more waistband capacity × margin per garment ≈ $400/month gained

Total monthly benefit ≈ $1,650. Against a typical Dahao price, that puts payback in the 4–6 month range—before counting the quality and delivery benefits that do not show up in the spreadsheet.

Adjust the Numbers for Your Factory 🛠️

The framework stays the same; only the inputs change:

• ✅ Higher local wages → faster payback
• ✅ Higher defect rates → faster payback
• ✅ More style changes → faster payback

The more painful the station, the faster the machine pays for itself. That is why bottleneck automation almost always wins the ROI comparison.

"If your spreadsheet says the bottleneck station automation does not pay back, check the numbers you typed in—not the machine."

Run the Framework on Every Candidate 🏁

Rank every automation candidate by the same four numbers. The station with the fastest payback goes first. The rest follow in order—and each one funds the next.

👉 Want help filling in your numbers? Contact Mellin for machine pricing and payback support. Mellin—the smart choice for smart sewing.