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DCM return on investment (ROI)

· 5 min read
Dmitry Zhifarsky
Dmitry Zhifarsky
Founder

Considering that DCM is a paid product, it's reasonable to raise the question of what value a company will receive from using it.

Let's calculate the return on investment (the ratio between income and costs) from using DCM in the development process. Hopefully it will help you fully realize the rationality behind it.

note

This article focuses on the day-to-day (or in other words, short-term) benefits of using DCM and does not include the ROI of avoiding having to deal with accumulated tech debt.

Value of a developer's hour​

First, we need to count what's the real value of a developer hour.

We can simply divide the annual salary by 1900 (average a year), but this approach has several problems.

First, it's important to mention that the number of working hours per year depends on the country. For example, in the UK it's 1730 hours per year, in the US - 1801, and in India - 2117. Nevertheless, we will still use the average 1900 since our goals is to get an approximate number.

And the second problem is that developers, as any other employees of any sphere, make much more money than they receive with their salary, otherwise the business will be running at a deficit. Developers need to be provided with a work area, Internet and cookies, you also need to pay rent and so on. Oh, and there are still financial rewards, corporate events, various bonuses, etc.

With all that, a developer must be profitable, which means they should yield net profit to the company directly or indirectly. In practice, this means that the work of a developer, depending on the situation, brings in 2-10 times much money than it is spent on their salary. It is important to emphasize that developers are no different from any other salaried employees.

Let's take the skeptical side and pick the multiplier 2.

What does this all this? If a developer fell out of the development process for 1 hour, the company has lost an amount of money equal to two hours of their work.

There is another factor influencing the price of the present working hour. The fact of the matter is that a developer does not code 8 hours per day. In the best case they will work directly with code for 6 hours. If you are reading this text not in the "skeptical mode", you understand that 4 hours (considering all meetings and code reviews) is much more plausible time.

It turns out that the cost of an hour needs to be multiplied by 8/6=1.33 (skeptical mode) or 8/4=2 (closer to the reality).

Now let's multiply the two discussed multipliers and get the final multiplier, by which you need to multiply the cost of an hour of a developer:

  • a multiplier for skeptics: 2 * 1.33 = 2.66
  • a multiplier, closer to reality: 2 * 2 = 4

Note: considering various simplifications, in practice, the coefficients will be higher.

Now, let's pick an average salary. For that, let's use the one provided by GermanTechJobs. According to the GermanTechJobs data the average salary for a Flutter developer in 2023 is $68.700 (€62.500) per year.

Note. Any additional contributions to various finds and paid taxes are not included.

If the salary is $68.700, the hourly rate will be $68.700/1900 = $36. It turns out that if a developer gets distracted on fixing an error for 1 hour, then the company will not be able to earn:

  • for the skeptic: $36/hour * 2.66 = $96/hour
  • closer to reality: $36/hour * 4 = $144/hour

This is the real man-hour cost (the value of) one hour of a developer when he is doing something useful.

How many hours DCM saves​

It is very difficult to tell for sure, how many hours per year DCM will save when finding errors in the early stages. Errors can be very different. A developer can notice some of them himself and immediately fix them. Nevertheless, sometimes a bug can distract a developer from useful activities for a few days.

On the basis of empirical considerations for sceptics, let's say that the analyzer will save at least 1 working hour of a developer a week. Yes, fixing a bug itself usually takes minutes, but as for the attempts to reproduce the problem, conversations in a bugtracker, test runs, merges and so on, it will easily take an hour.

There are approximately 50 weeks in a year meaning 50 saved hours.

It's time to count ROI​

Then using DCM, one programmer with a salary of $68.700 will return to the business each year:

  • If you are a skeptic: $96/hour * 50 hours = $4.800
  • Reality: $144/hour * 50 hours = $7.200.

Now let's take a typical team of 5 people. Having introduced DCM, we can expect that, thanks to the saved time, the team will be able to perform useful work that will cost:

  • Skeptic: $24.000
  • Reality: $36.000

And the Teams version for 5 people costs $840. Have different numbers?

Conclusion​

Of course, the given calculations are approximate and do not give you exact numbers for your company's team. For example, your company might be located in a region where the price for developer's hour is way low or the number of working hours is different.

But, even though the calculations may not be suitable for all companies, we hope that we managed to demonstrate how to approach the evaluation of the effectiveness of using DCM in terms of business as a whole.