How to Calculate Your ROI Using HIPE's CPQ (Configure, Price, Quote) Module
This article is part of our new “How-To” blog series, designed to show packaging converters how to generate a return on investment with HIPE. Our first article begins with the implementation of the CPQ module.
Why calculate the ROI of your investment in HIPE?
At Packitoo, when we start a project with a client and analyze a business process, we begin simply by observing how your company spends time, energy, and resources on tasks that could be automated, centralized, made more reliable, or improved. This means that significant value is lost right from the start, and it needs to be identified and measured.
HIPE helps you optimize your product configuration, pricing, and quote generation (CPQ) processes and turns these time and performance savings into tangible benefits.
HIPE consists of three main modules: CPQ, CRM, and Project Management, all of which will eventually be powered by AI agents. Our ROI calculation method is tailored to each process, allowing you to assess profitability by module and then perform an overall evaluation if you choose to deploy the entire solution.
- implement only the CPQ module,
- or just the CRM and Project Management modules.
This flexible approach allows you to:
- Calculate the ROI of your project with HIPE
- Assess the profitability of your upcoming investments
- Identify the key performance indicators to track after deployment with your sales, order processing, engineering, prepress, and production teams
Implementation of the CPQ module
- save time
- send quotes faster
- automate follow-ups
- receive specific feedback in the event of a rejection
- improve the accuracy and relevance of quotes based on customer history and profile
What is the purpose of the calculation?
- time saved when creating quotes
- additional sales resulting from improved conversion rates
- reducing margin losses caused by errors in quotes
What does the data show?
In a custom, make-to-order manufacturing environment, the most commonly used performance metrics for measuring the impact of a CPQ compared to manual processes (Excel, quotes via ERP, Word/PDF quotes, email approvals, etc.) are:
- The average time to issue a quote (following a customer request)
- The error rate in quotes (configuration / feasibility / price)
- The rate of requests for changes or revisions to quotes
- The quote-to-order conversion rate
- Pre-sales design time or design phase (Engineering Department, prepress)
- Average gross margin per order and margin variation
- Total quote-to-cash cycle time (from customer request to payment)
- The on-time delivery rate when the CPQ is integrated with the production ERP
- Customer satisfaction level (NPS or satisfaction score after quote/order)
What are some typical improvements?
The exact benefits depend on the industry and the initial maturity level of the process, but the following orders of magnitude are commonly found in industry case studies.
- Reduced time to quote
- It can take anywhere from several days to a few hours, or even a few minutes for standardized configurations.
- Typical improvement: A 30% to 80% reduction in quote generation time in a make-to-order environment (such as the corrugated packaging industry), thanks to the automation of configuration and pricing rules.
- Reducing quotation errors
- The rules built into the configurator significantly reduce configuration and pricing errors.
- Observed reductions: 50% to 90% fewer errors, resulting in fewer disputes, fewer production adjustments, and fewer corrective trade discounts.
- Sales Productivity and Pre-Sales Engineering
- Sales and technical teams spend less time recalculating prices or checking feasibility.
- Typical gains: 20% to 40% time savings for sales representatives and 20% to 30% for pre-sales engineers and design engineers
- Conversion rates and revenue
- Greater responsiveness—with faster and more reliable quotes—leads to higher acceptance rates for proposals.
- Several case studies report a 5% to 15% increase in the quote-to-order conversion rate following the implementation of a CPQ integrated with the CRM.
- Margin Control
- Guided pricing (discount rules, price ranges, margin alerts) reduces margin losses during negotiations.
- Common improvements observed: an increase of 1 to 3 percentage points in the average gross margin, and a reduction in the variation in margins among sales representatives.
- Downstream industrial performance
- Fewer configuration errors early on mean: fewer quality issues, fewer fixes in production, greater overall efficiency, and better adherence to deadlines.
- Studies on industrial digitalization show that digitizing processes (including CPQ) can lead to an overall improvement of 20 to 30% in operational efficiency, thanks to reduced downtime for teams and smoother information flows.
Data required for calculating the HIPE ROI — CPQ module
Company A
A medium-sized company in the corrugated packaging sector, located near Bordeaux, France. Projected revenue of approximately €10 million. The company’s sales team typically generates 15,000 quotes per year, and it regularly participates in major packaging trade shows.
Input data:
- Annual revenue
- Number of quote lines per year
- Average number of quote lines per sales proposal (to determine the number of quotes/sales proposals sent to customers)
- Quote-to-order conversion rate
- Average cart value per order
- Gross margin (contribution)
- Time spent by a sales representative or sales administrator preparing a quote
- Time spent by a cost estimator or design engineer to prepare a quote
- Average hourly rate for a sales representative / estimator / design engineer
- Percentage of quotes that can be fully automated
- Percentage of quotes containing an error
- Estimated increase in conversion rate due to a faster and more consistent response
- Impact rate of errors in quotes, as a percentage of revenue
Detailed ROI calculation formulas:
1️⃣ Time saved on preparing quotes
Time saved = ((Time spent by the sales representative + Time spent by the estimator/design engineer) converted to hours worked) × Average hourly rate × Number of quotes per year × % of automated quotes
2️⃣ Additional margin thanks to increased conversion rates
Margin gain from conversion rate = Number of quotes per year × Estimated gain in conversion rate from HIPE × Average order value × Gross margin
3️⃣ Additional margin through better control (guided pricing)
Margin gain from guided pricing = Increase in gross margin (additional percentage point(s)) × Annual revenue
4️⃣ Losses avoided thanks to fewer errors
Savings from reducing errors = Number of quotes per year × % of quotes containing errors × Quote-to-order conversion rate × Average order value × Margin × Error impact rate
Data from Company A:
- Annual revenue: €10,000,000
- 15,000 quote lines per year
- Average number of quote lines per offer (sales quote): 1.92
- Quote-to-order conversion rate: 20%
- Average order value: €3,500
- Gross margin (contribution): 55%
- 20 minutes spent by the sales representative preparing a quote (client briefing, internal discussions, finalizing the proposal, follow-up)
- 20 minutes spent by the design office/estimator preparing a quote (calculations, CAD drawings, methods, internal discussions)
- Average hourly rate: €38/hour
- 50% of quotes can be automated (configurable products such as FEFCO, ECMA, multi-configurable items, etc.)
- 5% of quotes contain an error
- Estimated conversion rate increase: +1% — example: from 30% to 31%
- Impact rate of an error (% of the relevant revenue): 10%
📈 Calculations:
- Time saved: ((20 + 20) / 60) × 38 × (15,000 / 1.92) × 50% = €99,000
- Increase in profit margin due to higher conversion rate: (15,000 / 1.92 × 1%) × 3,500 × 55% = €150,400
- Increase in profit margin thanks to guided pricing: 10,000,000 × 1% = €100,000
- Avoided losses: (15,000 / 1.92) × 30% × 5% × 3,500 × 10% = €41,000
💰 Total CPQ module: €390,400 in annualized savings