When all the things you can do exceed the resources you have available, you have to pick and choose. In almost every case, you want to choose based on which ones have the highest return on investment. You quantify the potential benefit, quantify the cost, divide the former by the latter, and pick the ones with the biggest ratio. Easy. Except when it’s wrong.

The first situation where return on investment will lead you astray is when the investment is small. In those situations, don’t bother. There’s overhead and error involved in calculating the investment and the return. When the cost is low, the effort to quantify isn’t worth it because the most it can save you is only a very small amount. And that’s without getting into what might happen if you’re wrong.

The second situation is similar to the first in that incorporating RoI can only save you a small amount. This is when you’re choosing from a menu of different options that have different benefits and different costs, but the costs aren’t that different. Suppose one service has 99.99% reliability costing $50/year and the other has 99.9% costing $10/year. Suppose for your business you think 99.99% is twice as good as 99.9%. That means that the latter has 2½ times the RoI as the former. That seems like an easy answer, but we’re talking about $40/year here. Technically the first one costs five times as much as the second, but compared to most business expenses, they cost basically the same. When this happens, take cost out of the equation entirely. Don’t bother with return on investment, just focus on return. Otherwise you’ll risk being penny wise but pound foolish.