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Cost/Benefit Analysis and Return on Investment are measures often used by financial managers to gauge the efficiency and effectiveness of their budget policies.
  • Cost/Benefit (or actually, Benefit/Cost) is a ratio that shows the value of benefits realized for each dollar spent. It’s calculated by dividing the value of benefits realized by the total costs expended to get those benefits. 2.34:1 means that for each dollar spent there were $2.34 in benefits realized
  • Return on Investment is a tool for determining the interest rate earned on an investment. It’s calculated by determining the amount spent, the value of the benefits that are realized and applying a formula. Subtract the total costs figure from the total benefits realized, divide that by the total costs and multiple the result by 100. The final number is a percentage rate of return. 134% means that every dollar spent earned an annual return of 134%. Since we’re seeing 5% - 8% in the stock market 134% is pretty good!

The CBA/ROI calculator does these math problems for you based on the numbers you provide.

Books
Benefits
 
Number borrowed or used  Enter a number that represents the use of your book collection – books used and reshelved in the library, books borrowed, e-book accesses. 
Average Retail cost of a book  Enter a number that represents the average price your users would pay for each library book they borrowed, used in the library, or accessed online  
User time saved for each book borrowed (in 10ths of an hr) Enter in 10ths the part of an hour that your user saved by having access to your collection. If you think they saved 15 minutes of searching for and buying a book elsewhere (a local or online bookstore) then you’d enter .25
Costs:
 
Your book budget Enter your budget for books – print and electronic
Portion of all staff time devoted to the book collection (order, receive, catalog, process,shelve,etc) in 10ths Enter in 10ths the portion of staff time (professional and non-professional) devoted to the book collection. This includes selecting, order, cataloging, processing, circulating, shelving, etc. In a large academic library this runs around 14% so you’d enter .14. In a hospital library that number might be a bit larger.
Journals
Benefits
 
Number articles read by all users Enter a number that represents all the journal articles your users read. • If you have e-journals start with the statistics provided by the vendors that represent EITHER the number of articles accessed or the number of tables of contents accessed (or a combination but not both for the same title.) • Add to that your shelving statistics. This assumes that for each journal reshelved your users read at least one article and that for each table of contents accessed online your users read at least one article. It is likely that this will represent real use. Some reshelved journals weren’t read at all and some represent multiple articles read. On AVERAGE you are assuming one article read per title reshelved or accessed
Per article price from a vendor Enter the cost your user would pay to get an article on a pay-per-view basis or through a vendor. Costs can range from $35 – $75 or more.
User time saved per article available through library (in 10ths of an hr) Enter in 10ths the part of an hour that your user saved by having access to your journals collection. If you think they saved 15 minutes of searching for and getting a copy of an article elsewhere (pay-per-view, a colleague) then you’d enter .25
Costs
 
Journal budget (print and electronic) Enter your budget for journals – print and electronic
Portion of all staff time devoted to journal collection (order, license, receive, process, manage, shelve, etc.) in 10ths Enter in 10ths the portion of staff time (professional and non-professional) devoted to the journal collection. This includes selecting, order, processing, circulating, shelving, etc. In a large academic library this runs around 11% so you’d enter .11. In a hospital library that number might be a bit larger.
Databases
Benefits
 
Number search sessions for one or more databases Enter a number that represents the search sessions reported by your database vendors. You may want to assume that your users would seek access to these databases elsewhere if the library didn't have them. They might go to an information broker or they might purchase a subscription individually. Use one or the other option but not both in this section. You may want to assume that your users are likely to pay for only a percentage of the searches they did themselves or that you did for them. You could reduce the total number of sessions to that percentage. Don't include databasese that are available free, such as PubMed, or that could be replaced by a free equivalent (Ovid Medline by PubMed).
Broker's price for a search or individual subscription cost Enter the cost your user would pay to get a search elsewhere or to subscribe individually to the database.
User time saved per article available through library (in 10ths of an hr) Enter in 10ths the part of an hour that your user saved by having access to the database through the library. If you think they saved 15 minutes of searching for and getting a copy of an article elsewhere (pay-per-view, a colleague) then you’d enter .25
Costs
 
Database budget Enter what you pay for the database(s)
Portion of all staff time devoted to managing the database subscription Enter in 10ths the portion of staff time (professional and non-professional) devoted to the journal collection. This includes selecting, order, tracking URLs, managing passwords, etc.

 

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