Physical AI cost structure tool

Warehouse and Factory Robot TCO, Payback and NPV Calculator

For operations and engineering managers evaluating robots or humanoids in a warehouse or factory. Enter the work hours to be replaced, the fully loaded hourly labor cost, actual utilization, upfront cost and operating cost to get annual net benefit, simple and discounted payback, NPV and total cost of ownership (TCO) over the evaluation period, and compare buying with a Robots-as-a-Service (RaaS) contract under the same assumptions. It calculates cost structure; it is not investment advice.

1. Inputs

Changes the display only. No exchange-rate conversion is done, so enter every amount in the same currency.

Purchase option costs

Include system integration, safety equipment, site work and training, not just the robot price on the quote.

Yearly total of the maintenance contract, parts and consumables, electricity, software licenses and remote supervision / exception-handling staff.

Work replaced and utilization

How many hours a day (shifts × shift length) and days a year the target work runs. Example: two shifts of 8 h = 16 h, 300 days.

60%

The share of the target work hours the robot actually takes over. Keep it below 100% if supervision or exception handling stays with people.

Hourly cost including insurance and benefits, not just wages.

75%

The share of planned work time the robot actually works. Charging, failures and downtime losses go here.

50%

In the first year the benefit falls short of target while the site adapts. It multiplies only the first-year benefit; operating costs and fees are paid in full. 100% means no ramp-up.

Evaluation settings

The company's weighted average cost of capital (WACC) is commonly used. 0 gives an undiscounted sum.

5 years
RaaS (subscription) option

Upfront cost: integration, site work and safety equipment paid outside the contract. Annual fee: the subscription plus operating costs the contract does not cover (supervision, electricity, etc.). Defaults are example assumptions.

2. Results

Simple payback (buy) --
NPV (buy) --
Work hours replaced per year --
Annual benefit (steady-state year) --
Annual net benefit (benefit − operating cost) --
Discounted payback (with ramp-up) --
TCO over the period (undiscounted) --
Cost per effective robot hour --

Buy vs RaaS (same period, same discount rate)

Item Buy RaaS
Upfront outlay -- --
Annual cost -- --
Total cost over the period (undiscounted) -- --
NPV -- --
Discounted payback -- --

* Note: This calculator compares cost structures for an on-site deployment decision. It is not investment advice or a basis for decisions about any company or financial product. Defaults are assumptions that illustrate the method. Taxes, depreciation, residual value and wage growth are not included, so use site measurements, quotes and a review by your finance team for real decisions.

3. Utilization sensitivity

Results when only utilization changes and every other input stays the same. The bold row is your current input.

Utilization Annual net benefit Simple payback NPV buy NPV RaaS

4. Cash flow by year

Year 0 is the upfront outlay and year 1 includes the ramp-up. The cumulative column adds each year's cash flow discounted to present value; the last year's value is the NPV.

Year Buy cash flow Buy cumulative (disc.) RaaS cash flow RaaS cumulative (disc.)

When does a robot pay back? How the calculation works

The robot's price alone does not decide when a deployment pays back. Total cost of ownership (TCO) is the sum of direct and indirect costs: purchase and installation, operation and maintenance, downtime losses, and replacement or disposal. The benefit depends on the work hours the robot actually takes over and its utilization. This calculator turns those values into yearly cash flows and shows simple payback, discounted payback and NPV together.

1. Formulas

Both options use the same benefit; only the upfront outlay (Upfront_cost) and annual cost (Annual_cost) differ. For buying they are the upfront investment and annual operating cost; for RaaS, the RaaS upfront cost and annual fee.

Hours_replaced = Hours_per_day × Days_per_year × Share_replaced Benefit = Hours_replaced × Loaded_wage × Utilization Net = Benefit − Annual_opex Simple_payback = Upfront_cost ÷ Net R_0 = −Upfront_cost · R_1 = Benefit × Ramp_up − Annual_cost · R_t = Net (t ≥ 2) NPV = Σ_{t=0..N} R_t ÷ (1 + i)^t TCO_N = Upfront_cost + Annual_cost × N

Simple payback divides the upfront investment by the steady-state net benefit, so it ignores ramp-up and the time value of money. Discounted payback is the point where the cumulative discounted cash flow reaches zero, interpolated linearly within the year. Cost per effective robot hour divides the period TCO by the effective work hours over the same period (hours replaced × utilization, first year scaled by ramp-up), so you can compare it directly with the hourly labor cost.

2. The variables that move the result most

Usually utilization and the share of work the robot takes over. Assuming one robot replaces one worker outright makes payback look far too short. Use the sensitivity table to see how much NPV moves when utilization changes by 10 points, and measure the target work in hours before deployment to set the share. A short simple payback can still come with a negative NPV once ramp-up and discounting are included.

3. Comparing buying with RaaS

Robots-as-a-Service turns most of the upfront investment into monthly or yearly fees. In June 2024 GXO and Agility Robotics signed a multi-year RaaS agreement to deploy the Digit humanoid in logistics operations, where Digit moves totes from collaborative robots onto conveyors, managed through the Agility Arc platform. Compare the two options by NPV over the same period at the same discount rate, and decide what to add to the annual fee based on whether the contract covers maintenance, software updates and replacement, and on its minimum term and termination conditions.

4. Frequently asked questions

Q1. The NPV differs from the example code in the related article.

With the same assumptions (upfront 150,000, operating cost 20,000, 16 h × 300 days × 60%, 25 per hour, 75% utilization, 8% discount rate, 5 years), the annual net benefit of 34,000 and the 4.4-year simple payback match. The difference is how ramp-up is applied. The article's code multiplies the whole first-year net flow (benefit − operating cost) by 50%, giving a 5-year NPV of about −29,989; this calculator multiplies only the first-year benefit and keeps the operating cost in full, giving about −39,248. Maintenance contracts and supervision are usually paid in full during ramp-up, so the calculator uses the more conservative approach. Set the first-year benefit factor to 100% and both give the same result (about −14,248).

Q2. Can I use this result for investment decisions?

No. It is an informational calculation for comparing cost structures when evaluating an on-site deployment. It is not a basis for decisions about any company or financial product, and it does not include taxes, depreciation, residual value, subsidies or wage growth.

Q3. What discount rate should I use?

The company's after-tax weighted average cost of capital (WACC) is commonly used for NPV. If your company has an internal hurdle rate, use that. A positive NPV means the investment adds value at that discount rate.

Q4. How is the share done by the robot different from utilization?

The share is the part of the target work hours you plan to hand over to the robot; utilization is the part of that planned time the robot actually works. For example, if a robot is given 60% of 16 hours of daily work at 75% utilization, it actually replaces 7.2 hours a day.

Q5. How do I enter a deployment of several robots?

Add up the upfront and operating costs for all units, and enter the total work hours the robots share as the daily work hours. Integration cost per unit can fall and supervision can grow as the fleet gets larger, so get quotes for each fleet size and calculate them separately.

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Primary sources

Data and formulas last verified: 2026-10-23 · Operator: Huni ([email protected])