How to Calculate the Cost of Inefficiency

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calculating costs and using pie charts

When you're part of a business, costs are a fact of life; cost inefficiencies don't have to be. Today, we'll break down why the difference matters, how to catch and calculate cost inefficiencies, and how you can eliminate these problems once and for all.

Costs vs. Cost Inefficiencies

You've likely heard the old saying, "You have to spend money to make money." It's a gentle reminder that business costs aren't necessarily the enemy--but wasteful practices, bad habits, and other inefficiencies are.

What separates a cost from a cost inefficiency? Here's a quick breakdown:

  • Cost: A cost is something you can't avoid. It's necessary to keep your company running--for example, the cost of internet service or paper and ink.
  • Cost inefficiency: A cost inefficiency occurs when a necessary cost gets out of hand due to circumstances within your control. It's a waste of money that isn't returning benefits, often calculated by taking time wasted per employee and multiplying that by the employee's hourly earnings.

Of course, it's easy to tell the difference on paper; put these definitions in a real-world business scenario and suddenly, things get a little more complicated. That's why it's smart to know what to look for--and, perhaps most importantly, what to do once you've identified these inefficiencies.

Calculating Inefficiency

According to Gartner, professionals spend 50% of their time searching for information, and take an average of 18 minutes to locate each document they are looking for. And it's no wonder when you consider that a company's documents are stored in filing cabinets, desktops or laptops, in email, or on a central server.

So how can you calculate the cost of chasing down all these documents? It's simple, actually. Just calculate the wasted time employees spend searching for documents and then multiply that by their salary. Take the following example from

Users waste 30 minutes a day (16 days a year) searching for documents, on average. That’s $3,900 per employee per year in lost productivity (assuming $30/hour), and more vacation time than the average US worker accrues each year.

This same sort of calculating can also help you understand your business' inefficiencies in other areas. Let's take a look at some additional areas next. 

Types of Cost Inefficiencies (and The Best Solutions)

How do you know what cost inefficiency looks like? How can you calculate the amount of money it actually wastes? Here are just a few examples--and the solutions that can address them:

Print Problems

Printing, while still necessary for communication and collaboration, can easily get out of hand. For example, employees might use color or print single-sided documents without realizing it, contributing to wasteful habits; in other cases, the printer itself might be outdated and inherently wasteful.

To calculate the cost of print cost inefficiencies, start by tracking printer usage across all your machines.

Solution: Managed print services doesn't just creative visibility into your print environment so you can see where your inefficiencies are. It also helps you build print rules, optimize printer settings, and even upgrade or replace wasteful machines to save money in smart ways.

Paper Workflows

Paper workflows create a lot of inefficiencies. Paper itself is a significant cost, and so is storing and securing it--not to mention the time spent making copies, physically transporting them, and trying to communicate on paper instead of digitally.

To calculate these inefficiencies, consider obvious costs such as ink and paper--but don't overlook the money you lose while your teams hunt for documents in file cabinets or send hard copies via mail.

Solution: Document scanning allows you to digitize your data--which cuts paper and ink costs while boosting efficiency across the board.

Desk-Based Processes

Desk-based processes might have made sense once upon a time, but now they're a huge cost inefficiency. When work has to be done in a specific setting or location, your company misses opportunities and wastes time that could have been spent improving customer experiences.

To calculate the inefficiencies of desk-based processes, think about how much time is wasted "in transit"--that is, waiting for someone to return to their desk or troubleshooting a computer because it's the only point of contact.

Solution: Mobile workflow tools allow you to do business wherever you are. That enables remote and hybrid work while cutting out the inefficiencies of desk-based processes.

Manual Tasks

Manual tasks waste time--there's no way around it. They're also frustrating, repetitive, and have a huge potential for human error.

To see the full scope of inefficiency from manual tasks, identify which workflows don't strictly need to be completed by a human--then keep track of all the costs involved, including wasted time and resources.

Solution: Workflow automation allows you to automate those manual tasks. Your employees get to spend their time more wisely, which reduces inefficiency--and, better yet, automation removes the risk of human error and keeps your teams from having to double back on themselves to address mistakes.


Costs aren't the enemy--cost inefficiencies are. If you want to remove inefficiency from the equation, you need to understand where those problems come from, how much of your budget they represent, and what the best solutions look like.

Don't struggle through problems on your own. Contact us today to identify and eliminate these inefficiencies in their tracks.