Calculating the return on investment (ROI) of user experience work involves determining and demonstrating how design changes can impact business goals — revenue, cost savings, or other key performance indicators (KPIs). 

ROI Calculations Encourage Buy-In

Many UX teams complain that they aren’t brought into projects early enough, they don’t have enough funding, they don’t have enough UX professionals, and so on. Often, these kinds of problems come down to a lack of buy-in or support from leadership and a lack of UX maturity in the organization. Changing that kind of cultural perspective can take years.

Calculating ROI is a powerful tool for building buy-in, because it can demonstrate that UX isn’t just good for users — it’s also very good for the business. 

Unfortunately, many UX teams do not calculate the ROI for their work — often because they have anxieties about doing these calculations, and those anxieties hold them back. Let’s look at 3 common myths about calculating the ROI of UX work:

  1. The ROI of UX is all about money.
  2. The ROI of UX has to be perfectly accurate.
  3. The ROI of UX has to account for every detail.

1. The ROI of UX Is All About Money

When calculating return on investment, the end goal usually is to convert your UX impact into a monetary amount — usually, but not always. People often get stuck because they are trying really hard to figure out how to put a dollar amount on something. But calculating the ROI of UX is more about demonstrating that design that improves the customer experience  has a positive impact on our business goals – whatever those goals might be. Business goals often come down to money, but not always.

For example, consider a large government agency that funds research on the ocean and the atmosphere. The agency publishes findings and resources for scientists and the public. The leadership of this agency might care about the number of people it reaches or the perceived quality of its resources more than about something like profit. 

Instead of worrying so much about connecting UX to money, think about who you’ll show the calculation to. What does your specific audience value? What is important for your audience? It might be money or it might be impact, perception, or retention. 

2. The ROI of UX Has to Be Perfectly Accurate

We want ROI calculations to be as accurate and realistic as reasonably possible. But, ultimately, these are only estimates. As a consequence, they cannot (and don’t have to be) perfect. 

For example, imagine that a redesign of an internal application reduces the amount of time it takes employees to complete important tasks. For one frequently performed task, we can multiply the time reduction by average hourly pay, the number of employees, and the frequency of the task. 

That multiplication gives us $400,000 US per year — in other words, by improving the efficiency of these employees, we estimate that we’re now saving $400,000 that would have otherwise been spent paying employees to do a wastefully inefficient task.

Does this calculation mean that the company will literally see an extra $400,000 by the end of the year? No, it doesn’t — for two reasons.

First, this calculation assumes that everything else besides the design remains equal, that no other external variables would impact employee performance or productivity. It imagines a world where everything except the design stays constant — which of course, is rarely true.

For example, if we were talking about an external, customer-facing product, maybe our competitor lowers its prices.  That would certainly impact our revenue, but it’s beyond our control. And usually, those things are unpredictable, so we can’t account for  them in our calculations. So, these ROI for UX calculations assume that the world around the product won’t change, only the design itself. 

Second, it also assumes that just because the employees are more efficient, they’ll work less and the client won’t have to pay them as much. Or, maybe they will use their extra time for some other more important work — so they will have higher productivity. That might or might not be true. People may decide to read news in the extra time they’re gaining. But, remember, this is just one calculation of the value of efficiency for a single task. In our redesign, we may also have improved other critical, high-frequency employee tasks.

So probably, now, because the employees have better designed and more efficient intranet, they aren’t wasting as much time. Hopefully, they’ll be able to use that saved time for other, more profitable tasks. That potential profitability is what we’re trying to estimate the value of. The ROI calculations are not usually meant to literally calculate exactly how much extra money will show up at the end of the year.

3. The ROI of UX Has to Account for Every Detail

The third myth I sometimes encounter that ROI calculations must be extremely detailed and that they take a lot of time to complete. Sometimes that’s the case, but it doesn’t always have to be.

ROI calculations can be as detailed and comprehensive as you want them to be. In the internal application example above, we could have also included the hourly cost of keeping the employees’ office heated and keeping the lights on. However, I recommend doing only as much work on these calculations as is necessary to get your point across to your audience.

Case Study: Arguing for a Design System

A UX lead working at an agency decided he wanted to build a design system. Design systems can save designers and developers time, but creating one takes a lot of time initially. The agency’s leadership wasn’t sure that the long-term time savings would be worth the upfront time required to build the design system.

So, the UX lead looked up how long it took the design and development teams to build a single component, a video plugin, for a recent client project. He then multiplied that by the number of times they had created different version of that same element for different client projects over the past few years.

That’s a very simple calculation. But he was able to show his leadership how much time was wasted on one single component. His argument was: “Imagine how much we’re wasting on all components.” That argument, supported by a very simple ROI calculation, was enough to convince them.

What I love about this case study is how little work the UX lead did to prove his point. He said it took him less than an hour to gather all necessary information and perform the calculation.

Let’s think about how much more work he could have done in this calculation:

  1. He could have looked up the exact amount of time spent each time that component was built out. Instead, he just looked it up for one project, and then multiplied that by the number of times it had been recreated.
  2. He could’ve performed these calculations for lots of other UI elements — not just video plugins, but also tables, breadcrumb trails, form fields, and so on. 
  3. He could’ve tried to find out the average hourly pay for those design and development teams to turn that into a monetary amount.

None of that extra work was necessary for him to prove his point. He spent only as much effort as he needed to help his leadership get an idea of the vast amounts of time that were being wasted.

Treat ROI as Estimation, Not Prediction

These three myths often stem from a misunderstanding of the point of ROI calculations for UX. In most cases, these are not meant to be (and really can’t be) sophisticated financial forecasts. It’s important to consider that fact when calculating and presenting them.

At their best, these are estimates of how much value (monetary or otherwise) the company is getting as a result of the investment. Tailor your calculations to your argument and your audience.

Learn How to Calculate ROI

To learn how to calculate ROI for your own projects, check out our full-day course, Measuring UX & ROI.