As described above, this figure simply represents the net income generated by the product during the time saved by test automation. As such, we can easily translate the number of hours saved by test automation into a number of weeks available in the market. Factor in the weekly production rate and the margin per unit, and the revenue recaptured becomes an easy calculation. In fact, many products are also affected by parameters this model doesn't consider, such as obsolescence of technology or the competitive value of being first to market with a new product. As discussed above, the model assumes that defects found prior to release are less expensive to fix than are defects found after release.
Many factors come into play here, such as support costs, costs of issuing patches, and so on.
The bottom line here reflects the cost savings the organization can realize by using automation to increase the number of defects identified and fixed before the product is released to market. Note that the analysis includes only the very tangible costs mentioned above, and excludes many less tangible but highly significant costs such as lost customer confidence. Again, in the interest of objectivity, this model understates the actual benefit offered by automation. The ROI calculation Each of the components evaluated above have produced very tangible, very objective quantification of the savings offered by test automation as it applies to the scenario you selected. As a result, the ROI for the first year will typically be substantially lower than the ROI for subsequent years.