What is CPQ?
CPQ stands for configure, price, quote. These are three steps a sales team might take to create a customized pricing solution for a potential customer.
Configure: When a company has numerous offerings or multiple possible configurations of those offerings, the first step in the quoting process is to determine the right configuration for the prospect.
Price: Once that configuration is created, the next step is to determine the price of the customized solution, taking into account each component of the configuration.
Quote: Once prices are assigned to each component and the total for the configuration is calculated, an accurate quote can be provided to the potential client.
By following these three steps, both the sales team and the prospect can proceed with the knowledge that every aspect of the configuration has been taken into account and priced accordingly.
What is CPQ Software?
Configure price quote software, more commonly called CPQ software, is a tool to accomplish CPQ more quickly and easily. It's used to provide accurate, customized quotes to prospects.
In addition to product configurations, CPQ software takes into account other factors such as optional features, quantities, customizations and discounts. It can also detect incompatibilities in configurations, ensuring potential customers receive correct and actionable quotes.
Using a tool for the CPQ process is essential when configurations contain numerous facets. It ensures the quote will be accurate, and can facilitate closings as the prospect can feel confident their quote has been calculated correctly.
In this way, CPQ software benefits both the sales team and the potential client.
CPQ Software Common Features
The best CPQ software will have a few common features, including the ability to:
Automatically adjust quotes quickly and accurately when prospects create their own configurations or submit change requests.
Create service level agreements (SLAs) that align with the prospect's custom configuration.
Integrate with existing customer relationship management (CRM) tools.
Integrate with existing enterprise resource planning (ERP) software.
Generate documents more easily through the use of contract and proposal templates.
Prevent quotes from being generated for incompatible configurations.
Which CPQ software you choose will depend on what features are essential to you and your sales team. Regardless of the one you choose, it might end up being more trouble than it's worth.
CPQ Software Implementation Challenges
While the short definition of CPQ software sounds simple, it's deceptively so. Software that can account for multiple products and services, and their prices, and every possible configuration thereof has to be a complex tool.
It then has to perform multiple calculations for each of those configurations, and get it right every time.
As you might imagine, this means CPQ software brings a unique set of challenges to the sales teams that use it, including:
Complexity of Setup: Before your CPQ software can generate accurate quotes for your prospects, you must first customize it. This means manually adding every product and services you have and entering the price for every item.
Customization: Once you have all your products, services and prices entered, you'll need to go through the possible customizations to indicate whether any are incompatible for any reason. Depending on the number of products and services your company offers, it can take quite a bit of time to cover every possible configuration.
Sales Team Adoption: It can be difficult enough to get your team to adopt new software. But when it's something as complex as CPQ software, they may be even more resistant to it. Also, learning new software takes time, and that's time they're not spending closing deals.
CPQ software can be a large expenditure, so you need to feel confident the software implementation will go smoothly and be worth the investment. This means you need to start with one basic question.
Do You Really Need a CPQ Tool?
Using CPQ tools to programmatically produce quotes is ideal for large companies with a vast array of products and services, and even more possible configurations of those products and services.
It's about more than the number of products, though. You and your team should also consider using CPQ software if:
Manually generated quotes are often inaccurate.
You aim to use numerous sales channels.
Manually creating custom configurations is too time consuming.
You aim to create more upselling and cross-selling opportunities.
Manually generating quotes slows down the sales process.
But just one of those factors isn't enough to justify using CPQ software. At least three of them—in addition to the number of products and services you have to offer—should apply before you consider the expense and difficulty of purchasing and implementing a tool as complex as CPQ software.
Another factor to consider is your industry. Some of the industries that benefit most from using CPQ software include:
Health and life sciences
Telecommunications
Software
Financial services
Food and beverage
Medical technology
Energy and utilities
Government
But for a small business, or one that has few offerings, CPQ software can be the equivalent of using a jackhammer to drive a nail. It's much too powerful a tool for smaller yet still important jobs.
And if you're buying a too-powerful tool, it's likely you're also paying for a lot of expensive bells and whistles you don't actually need.
This doesn't mean you have to forgo the CPQ software features that do apply to your team. It just means you would benefit from looking to a simpler solution that still offers what you need and leaves out what you don't. And that solution is Proposify.
CPQ Software Comparison
While Proposify is not CPQ software, some of their features do overlap.
Control and Visibility
Using software gives you control and visibility over every aspect of quote generation, something manual generation can't offer.
Quote and Approval Collaboration
Multiple team members can easily collaborate on quotes, and approvals are easily managed. Everyone remains informed at every stage of the process.
Helps Standardize Pricing
Because prices are entered at setup, they're consistently quoted regardless of who prepares the quote.
Prevents Rogue Discounting
An internal fee library allows you to store your products and prices all in one place. They can then be pulled into proposals, but are locked to prevent changes by individual sales team members.
Interactive Fee Tables
Interactive fee tables automatically calculate pricing based on the prospects' choices, and prices in the fee library, simplifying sales of complex products and systems.
Integrations with Other Tools
Integration is possible with several types of business management software, such as CRM, accounting and sales tracking software, eliminating workflow friction.
And then Proposify offers a few things CPQ software doesn't.
Simpler Setup
It's a powerful but less complex piece of software than CPQ, so setup is much more straightforward. Proposify walks you through every step.
Easier to Learn and Use
Again, because it's less complex, it's easier to learn and use. This will save your team time on adoption and everyday use.
Better Affordability
Proposify is less expensive than CPQ software. It's also more cost-effective because you're not paying for a lot of features you don't really need.
Finally, part of Proposify's current roadmap is to add specific CPQ solutions to become a truly comprehensive sales tool.
Simplify Your Sales
If you decide CPQ software is too complex for your purposes, go with a simpler option—Proposify. It will readily integrate with your CRM and other business management software to streamline your workflow, and provides many of the same features as CPQ software.
More importantly, it provides features CPQ software doesn't have, like affordability, simpler setup and use, and a shallower learning curve.
Learn more about how Proposify gives you end-to-end visibility into and control of your configuration process to help you generate accurate, customized quotes to your prospects.
