Cost Justification

 

Cost justification is an exploration that examines the expected costs versus the expected returns of a product or service. If a cost justification turns out well, that means the expected costs (how much money is being spent on a product or service) is lower than the expected returns (profit) of using the product or service. In other words, the return on investment (ROI) or economic gain or loss from having undertaken a project should be higher than the investment itself. Another outcome is that the costs and profit "break even" which means that the costs are recovered.

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A good article to know about is Marcus (2005)'s ROI of Usability, which explains how ROI plays into user interface design, including the benefits listed below.

 

Benefits that drive internal ROI:

• Increased savings from making changes earlier in the design process

• Increased productivity

• Decreased errors

• Decreased training costs

• Decreased user support

 

Benefits that drive external ROI:

• Increased sales

• Increased perception of value of company by the stakeholders

• Decreased customer support costs

• Reduced cost of providing training.

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Marcus, A. (2005). User interface design’s return on investment: Examples and statistics. R.G. Bias and D.J. Mayhew (eds.), Cost-justifying usability: An update for an internet age (pp. 17-39). San Francisco, CA: Morgan Caufmann.

 

Whalen, T. and Wright, D. (1999). Methodology for cost-benefit analysis of web-based tele-learning: Case study of the Bell Online Institute. The American Journal of Distance Education, 13, 25-43.