ROI Calculation Methodology

Transparent formulas and benchmarks behind our ERP savings calculator.

Introduction

At Moxogo, we believe in complete transparency. This page explains the methodology behind our ERP ROI calculator, showing how potential savings are estimated.

Calculations are based on conservative benchmarks and implementation experience. Actual results may vary by industry, processes, and adoption.

Headcount Optimization Savings

Staff Reduction Savings (Annual)
Formula
(Admin Staff × Avg. Admin Salary × 0.6 × (1 - Automation Level)) / 1.5
Admin Staff
Your current administrative staff count
Avg. Admin Salary
Average fully loaded salary + benefits cost
0.6
Percentage of automatable admin tasks
Automation Level
Your current automation level (0–100%)
1.5
Conservative efficiency factor
Industry Benchmarks
Benchmarks commonly show a large portion of administrative tasks are automatable with modern ERP workflows. The efficiency factor accounts for phased adoption and learning curves.
Example sources: ERP productivity studies and implementation benchmarks.
Example Calculation
Example (Admin Staff: 8, Avg Salary: $50,000, Automation: 30%)
(8 × $50,000 × 0.6 × (1 - 0.3)) / 1.5 = $112,000/year

Inventory Waste Reduction

Inventory Waste Savings (Annual)
Formula
(Annual Revenue × 0.15) × (Inventory Waste % / 100) × 0.5
Annual Revenue
Your total annual revenue
0.15
Inventory as percentage of revenue
Inventory Waste %
Your current waste percentage
0.5
Achievable waste reduction
Industry Benchmarks
Inventory often represents a meaningful percentage of revenue in operational businesses. Conservative projections assume partial waste reduction through better planning and inventory control.
Example sources: supply chain benchmark reports.
Example Calculation
Example (Annual Revenue: $5,000,000, Inventory Waste: 10%)
($5,000,000 × 0.15) × (10/100) × 0.5 = $37,500/year

Logistics Optimization Savings

Logistics Efficiency Savings (Annual)
Formula
(Annual Revenue × 0.08) × (1 - Logistics Efficiency) × 0.4
Annual Revenue
Your total annual revenue
0.08
Logistics as percentage of revenue
Logistics Efficiency
Your current efficiency (0–1 scale)
0.4
Potential savings from optimization
Industry Benchmarks
Logistics costs can be optimized through route planning, load planning, and reduced rework. Conservative projections assume partial capture of the gap to optimal performance.
Example sources: logistics cost studies.
Example Calculation
Example (Annual Revenue: $5,000,000, Efficiency: 70%)
($5,000,000 × 0.08) × (1 - 0.7) × 0.4 = $48,000/year

IT Infrastructure Savings

IT Staff Savings (Annual)
Formula
IT Staff × Avg. IT Salary × 0.4
IT Staff
IT staff dedicated to current systems
Avg. IT Salary
Average fully loaded salary + benefits
0.4
Effort reduction from consolidation and cloud migration
Industry Benchmarks
Modern ERP consolidation can reduce maintenance effort and infrastructure overhead. Conservative projections assume partial effort reduction to account for hybrid environments.
Example sources: cloud and infrastructure benchmark surveys.
Example Calculation
Example (IT Staff: 3, Avg Salary: $70,000)
3 × $70,000 × 0.4 = $84,000/year

Implementation Cost Estimate

ERP Implementation Cost (One-time)
Formula
Annual Revenue × 0.015
Annual Revenue
Your total annual revenue
0.015
Implementation cost estimate as 1.5% of revenue
Industry Benchmarks
Mid-market ERP implementations are often estimated as a percentage of annual revenue. 1–2% is a common range; this model uses 1.5% for planning.
Example sources: ERP implementation benchmark reports.
Example Calculation
Example (Annual Revenue: $5,000,000)
$5,000,000 × 0.015 = $75,000
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Disclaimer: Projections are estimates based on benchmarks. Actual results may vary.