Making decisions, whether for your business, personal projects, or even daily life, can feel overwhelming.
A cost-benefit analysis is a simple yet powerful tool to help you weigh the pros and cons of any decision.
By comparing the costs and benefits, you can make informed choices that align with your goals. The best part? You can easily create a cost-benefit analysis template in Google Sheets.
What Is a Cost-Benefit Analysis?
A cost-benefit analysis is a decision-making tool that helps you compare the pros and cons of a choice by weighing its costs against its benefits.
It allows you to assign values to both the expenses and the gains, making it easier to see if the benefits outweigh the costs.
This simple yet effective method is widely used in business, personal finance, and everyday life to make informed and rational decisions.
Step 1: Open a New Google Sheet
Head over to Google Sheets and open a blank spreadsheet. Give it a name that makes sense for your project, such as “Cost-Benefit Analysis Template.”
Step 2: Set Up Your Column Headers
In the first row, label your columns:
- Item
- Description
- Cost ($)
- Benefit ($)
- Net Value ($)
These columns will help organize your data so you can easily compare different costs and benefits.
Step 3: List Your Costs and Benefits
Under the “Item” column, list all the costs associated with your decision. This could include materials, labor, or any other expenses. In the next column, add a brief description of each item.
Then, in the “Cost ($)” column, enter the dollar amount for each cost. If an item has no cost, leave the cell blank or enter zero.
Next, move to the benefits section and list the advantages in the same format. Include the expected financial gain, efficiency improvements, or any other measurable benefits in the “Benefit ($)” column.
Step 4: Calculate the Net Value
To determine whether the benefits outweigh the costs, create a simple formula in column E. Click on E2 (the first row under “Net Value ($)”). Type the formula: =D2-C2 Press Enter to calculate. Drag the bottom-right corner of the cell downward to apply the formula to all rows. Now, this column will automatically show whether each item has a positive or negative impact.
Step 5: Add a Total Row
At the bottom of your list, create a row labeled “Total.” In the cost and benefit columns, sum up the total amounts using this formula:
- For total costs (C column): =SUM(C2:C20)
- For total benefits (D column): =SUM(D2:D20)
- For total net value (E column): =SUM(E2:E20)
These formulas will update as you add or remove items.
Google Sheets automatically saves your work, but you can also share your analysis with others. Click the Share button in the top right to send it to teammates or friends for feedback.
Get the Free Cost-Benefit Analysis Template
Get a copy of the Free Cost-Benefit Analysis Template. I’ve populated some cells as examples, but you can customize them as needed.
Final Thoughts
Decisions aren’t just about numbers—they’re about what feels right too. If something seems off, take a step back and rethink. Stay open to change, because flexibility often leads to the best outcomes.
Frequently Asked Questions
How do I set up automatic cost-benefit calculations?
Use the formula =D2-C2 in the Net Value ($) column to subtract the cost from the benefit. Drag the formula down the column to apply it to all rows.
Can I add a percentage calculation for ROI (Return on Investment)?
Yes! Add a new column for ROI and use this formula: =(D2-C2)/C2. This calculates the return on investment as a percentage. Format the column as a percentage for better readability.
How can I calculate total costs and total benefits?
Use the SUM function at the bottom of the respective columns:
Total Costs: =SUM(C2:C20)
Total Benefits: =SUM(D2:D20)
Total Net Value: =SUM(E2:E20)
These formulas will automatically update when you add or remove items.
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