calculate ROI testing automation

How to Calculate ROI Test Automation: A Guide for SQA engineers.

Testing is super important for making sure software and tech gadgets work smoothly. But doing it manually takes up a lot of time and effort. That’s where automation comes in handy.


Automating testing means using tools and programs to do the testing for you. It’s faster and more efficient than doing it by hand. This saves time and lets your team focus on other important tasks. Plus, automated testing can be done more often, so you catch any issues quickly.


There are lots of benefits to automation, like better reporting, finding bugs faster, and making testing simpler. But it’s not a one-size-fits-all solution. Before you dive in, it’s smart to weigh the costs against the benefits.


Setting up automation can be pricey at first. You’ll want to be sure it’s worth the investment. That’s where ROI (Return on Investment) comes in.


ROI helps you figure out if the time and money you put into automation are paying off. This guide will walk you through how to calculate it and what to consider along the way. Ready to get started? Let’s dive in!


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Table of contents

What is ROI Test Automation?

The ROI (Return on Investment) of Test Automation is a way to measure the value you get from implementing an automation strategy in your testing process. It helps in several ways:


  1. It shows you the financial impact, whether positive or negative, of investing in automation.
  2. It helps estimate when you’ll start seeing returns on your investment.
  3. It gives you a clear picture of potential gains and losses tied to the investment.
  4. It strengthens your case when pitching to potential investors.

Calculate ROI of Test Automation

To calculate the ROI, follow these steps:


  1. Subtract the estimated costs from the estimated benefits.
  2. Divide the result by the expenses.
  3. Multiply the outcome by 100 to get a percentage figure, which indicates the expected return on adopting test automation.


Savings represent what you gain by switching from manual tests to automated ones. Costs refer to the investment needed to create and set up the automated tests.


You can measure both benefits and costs in terms of money or time. Benefits can include savings from automation, reduced financial risks, time saved, or money saved on salaries. Costs can include money spent on automation adoption, time spent on developing and setting up tests, and expenses for maintaining and improving the testing environment.

Important Metrics to Consider before calculating ROI Test Automation

Before diving into calculating the ROI of test automation, it’s crucial to consider certain key metrics that significantly influence the outcome. Here are the top metrics to keep in mind:


  • Cost: This is a major factor driving the shift from manual to automated testing. While the initial setup and tool installation costs may not immediately reflect savings, in the long run, automation tends to reduce overall expenses.
  • Time: Even if you have skilled testers on your team, if they’re spending most of their time on manual tasks, it’s a significant loss. Time spent on repetitive tasks could be better utilized for essential business operations, particularly crucial for startups aiming for efficiency and growth.
  • Quality: Quality is paramount. If test automation leads to error-free products delivered in shorter timeframes, then quality becomes a crucial metric for ROI. Automation minimizes human error and streamlines repetitive tasks, resulting in improved product quality and higher customer satisfaction.


Considering these metrics ensures a comprehensive evaluation of the ROI of test automation, taking into account not just financial aspects but also time savings and quality enhancements.

How to get higher Automation Testing ROI


To enhance the ROI of test automation, consider implementing the following tips:


  • Decide What to Automate: Avoid wasting resources by automating everything. Evaluate and prioritize tasks that truly benefit from automation, ensuring your investment in tools and systems yields tangible returns.
  • Create Testable Products: Develop applications with testability in mind. Ensure each new release is structured to facilitate automated testing, enabling seamless integration with automation tools.
  • Use Standard Test Automation Tools and Frameworks: Opt for widely recognized automation tools and frameworks to ensure compliance with regulations and meet user expectations. While customization has its place, leveraging established solutions streamlines processes and enhances reliability.
  • Prepare Reusable Test Cases: Focus on creating reusable test cases to maximize efficiency. By reducing the time spent on repetitive tasks, testers can allocate more resources to creating comprehensive test suites and exploring different aspects of the product.
  • Prioritize the Right Tasks: Identify and prioritize high-priority test cases for automation. By tackling critical tasks first, you can streamline workflows and ensure timely delivery of essential features, ultimately maximizing ROI.


By implementing these strategies, you can optimize your test automation efforts and maximize the return on your investment.

Ways to Measure ROI Test Automation

Basic ROI Calculation

The most straightforward approach involves calculating the time saved by running automated tests instead of manual ones over a specific period. For instance, if it takes 250 hours to create automated tests for a software product, and using automation saves 20 hours of manual testing per week, the initial time investment would break even in about 13 weeks. To convert this into monetary terms, hourly rates of developers and manual testers can be multiplied by the time values, factoring in the time frame for assessment. For instance, if developers earn twice as much as manual testers, it might take around 26 weeks to see cost savings from adopting automated testing.

Additional Considerations

While the basic calculation provides a simplified view, a more accurate assessment might involve considering additional factors. These could include the time spent on maintaining and updating tests, time saved by avoiding errors from manual tests, or the scalability benefits of automated testing for large-scale operations.


By incorporating these factors into ROI calculations, organizations can gain a clearer understanding of the overall value and benefits derived from test automation.

Calculation of Efficiency of ROI

To calculate the Efficiency ROI, which focuses on time investment gains, the following formula is used:


Investment = Time spent on automated test script development + Time spent on automated test script execution + Time spent on automated test analysis + Time spent on automated test maintenance + Time spent on manual test case execution


Gain = Time saved from manual test execution or analysis * Total number of test cases (automation + manual) * Period of ROI / 8


This method assumes that test automation completely replaces manual testing and that only one tester is required for manual testing. However, since these assumptions may not always hold true, this calculation serves as a rough estimate rather than a definitive assessment.


The Risk Reduction ROI Calculation involves the following formula


ROI Calculation – Other things to Consider

ROI = (Reduction in monetary risk – Cost of risk control) / Cost of risk control


The reduction in monetary risk is calculated by subtracting the cost of risk control from the annual risk occurrence rate and dividing the result by the cost of risk control. The gain here represents the reduction in monetary risk that a company would face by not implementing automation technology, assuming that manual testers are more prone to making mistakes.

Continued Term Model:

When performing ROI calculations, it’s important to consider additional factors that may impact the results. For example, automation of certain processes may affect other operations, such as generating test reports automatically, thereby reducing the time and cost associated with producing QA documentation.


Moreover, not all tests may be suitable for automation. It’s essential to identify areas where automation can bring significant benefits and adjust calculations accordingly, considering that manual testing may still be necessary in other cases.


Additionally, reusing tests can lead to further cost savings. For instance, automating regression tests can eliminate the need for troubleshooting missed bugs, resulting in more accurate testing outcomes.


By taking these factors into account, organizations can make more informed decisions regarding the implementation of test automation and accurately assess its ROI.

Ensuring the accuracy of ROI calculations

Ensuring the accuracy of ROI calculations for test automation projects involves considering several subtle issues that can influence the final results.


Firstly, it might be challenging to assign a monetary value to certain aspects, such as the cost savings from preventing errors through automated testing, enhanced website credibility, or improved product quality.


Secondly, some parameters, like the costs of accessing third-party simulators or maintaining and training a testing team, may fluctuate over time in unpredictable ways.


Lastly, it’s crucial to understand that automated testing doesn’t guarantee flawless accuracy. Bugs may still arise and require attention, and manual testers may still be needed alongside automated processes.

To conclude on ROI Test Automation

To conclude, calculating ROI for test automation requires a thorough examination of various factors related to your business, product, and testing requirements. It involves selecting the appropriate calculation method, assessing relevant parameters, and considering additional factors that may affect the outcome.


Despite the complexity, obtaining an accurate ROI metric is invaluable for making informed decisions about investing in automated testing technology. It can also be useful for presenting the potential benefits to external stakeholders and investors.


Investing in automation tools, whether for testing or other purposes like CRM or sales automation, necessitates careful evaluation to understand its impact on productivity and finances. This overview provides a starting point for navigating this process.

Frequently Asked Questions

ROI in Selenium refers to measuring the effectiveness of return on investment gained from utilizing Selenium for test automation. It showcases the advantages of employing the Selenium test automation framework to achieve quicker results and reduce manual effort, ultimately leading to increased profitability.

The average ROI on automation typically stands at around 250% and usually manifests after approximately six months of implementing automation tools. However, the specific ROI figure can vary based on whether it’s calculated in terms of monetary gains or efficiency. As discussed in the blog above, there’s a formula provided for a clearer understanding.

The ROI process involves calculating the return on investment, which is essentially an approximation of the profit gained from your investment. To calculate ROI, subtract the initial investment cost from its final value, then divide the resulting number by the cost of the investment. To express the result as a percentage, multiply it by 100.

Measuring ROI in testing helps organizations:

  • Identify the most cost-effective testing strategies.
  • Allocate resources efficiently to maximize returns.
  • Justify investments in testing to stakeholders.
  • Continuously improve testing processes based on performance metrics.

Several factors can impact the ROI of testing, including:

  • Effectiveness of test automation.
  • Quality of test coverage.
  • Speed and efficiency of defect detection and resolution.
  • Reduction in post-release defects and associated costs.
  • Improvement in time-to-market for products or features.

To optimize ROI in testing, organizations can:

  • Invest in efficient testing tools and technologies.
  • Implement robust test automation strategies.
  • Prioritize testing efforts based on risk and impact.
  • Continuously monitor and analyze testing metrics to identify areas for improvement.
  • Incorporate feedback loops to iterate and refine testing processes over time.

Some challenges in measuring ROI in testing include:

  • Quantifying intangible benefits such as improved customer satisfaction.
  • Accounting for indirect costs and benefits associated with testing.
  • Ensuring accurate data collection and analysis.
  • Adapting ROI calculations to different testing methodologies and contexts.

ROI in testing can be effectively communicated to stakeholders through:

  • Clear and concise reports detailing the ROI calculations and analysis.
  • Visual representations such as charts or graphs to illustrate trends and findings.
  • Presentations or meetings to discuss the impact of testing on business outcomes.
  • Case studies or success stories highlighting specific instances of ROI achieved through testing initiatives.

Automation efficiency refers to the effectiveness and productivity achieved through the use of automated processes or tools compared to manual methods. It measures the ability of automation to streamline tasks, reduce errors, and optimize resource utilization.

Automation efficiency can be calculated by comparing the time, resources, and outputs of automated processes against manual processes. The formula typically involves measuring the time saved, error reduction, and productivity gains achieved through automation.