Learn German: Alles in allem hat sich die Mühe gelohnt. - All in all the effort was worth it.

The phrase Alles in allem is a fixed expression mirroring the English 'all in all' or 'overall'. The preposition in is a two-way preposition, but here it takes the dative case because it reflects a static summary rather than a movement or change of state. Allem is the dative singular neuter form of alles.

Why do we need the reflexive pronoun sich here?

The verb sich lohnen means 'to be worth it' or 'to pay off'. When expressing this specific meaning, it must always be used reflexively. A non-reflexive verb lohnen (meaning to reward or compensate someone) does exist, but it is quite rare and formal in modern German.

Why does the pronoun sich come before the subject die Mühe?

In German sentence structure, pronouns are 'lighter' than full noun phrases and tend to jump as close to the conjugated verb as possible. Therefore, the pronoun sich naturally places itself right after the conjugated verb hat, pushing the noun subject die Mühe slightly later in the clause.

Would it sound just as natural to use the simple past (lohnte sich) instead?

While lohnte sich is grammatically correct, conversational German strongly prefers the spoken past (Perfekt) for completed actions, especially when evaluating an outcome that matters right now. Hat sich gelohnt sounds much more natural for everyday spoken German and informal writing.