# Cost Benefit Analysis

> Cost-Benefit Analysis

- Skill: `sethdford/cost-benefit-analysis` (Agent Skill, multi-file: 2 files)
- Install (CLI): `npx skillmds@latest add sethdford/cost-benefit-analysis`
- Raw SKILL.md: https://api.skillmd.com/api/skills/sethdford/cost-benefit-analysis/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: sethdford (https://skillmd.com/u/sethdford)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/sethdford/cost-benefit-analysis

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# Cost-Benefit Analysis

Compare options by making costs and benefits explicit—even as ranges. The baseline (“compared to what?”) is part of the answer, not an afterthought.

## When to Use
- Budget or roadmap choices where money, time, and quality pull in different directions.
- Debates stay rhetorical until someone names what is gained and what is paid.

## Workflow
1. **Define baseline**: status quo or next-best alternative; restate the decision boundary.
2. **Costs—direct & indirect**: build, buy, run, support, compliance, and failure costs.
3. **Opportunity costs**: best forgone use of the same resources; say it in one line each option.
4. **Benefits—tangible & intangible**: revenue, risk reduction, speed, morale, trust; note who captures each benefit.
5. **Estimate magnitudes**: ranges and assumptions beat false precision; label confidence.
6. **Discounting** (if horizons differ): shorter payback vs long-run value—state the discount rationale simply.
7. **Hidden cost checklist**: maintenance burden, switching costs, cognitive load, training, org friction, vendor lock-in.
8. **Net assessment**: summarize net value vs baseline; list sensitivities that would flip the call.

## Examples
**Example 1:** Build vs buy: include 3-year ops, on-call, and upgrade tax—not just license vs engineering hours.

**Example 2:** “Quick” automation: add review overhead and exception handling; compare to manual baseline under real error rates.