What is CPQ (Configure, Price, Quote)?

‍What Does CPQ Stand For?

CPQ stands for Configure, Price, Quote.

As the name suggests, CPQ tools allow to put together a quote for the end customer with all pricing/discount information.

How does a CPQ work?

CPQs support three distinct functionalities

Configure: This stage involves customizing your sales process by configuring bundling, pricing, and rules of selling to meet the specific needs of a customer. Businesses often offer a wide range of options, features, and configurations for their products. CPQ software ensures that sales teams can easily navigate these options and create a product that aligns perfectly with customer requirements, reducing the risk of errors and improving customer satisfaction.

Price: Pricing can be a complex process, especially when dealing with a large catalog of products, discounts, and special offers. CPQ software automates the pricing process by applying predefined rules, discounts, and pricing models. This ensures that the pricing is consistent, transparent, and accurate, helping to avoid costly mistakes and discrepancies.

Quote: Once a product is configured and priced, the next step is to generate a quote. CPQ software streamlines this process by creating professional and detailed quotes that can be easily shared with customers. These quotes are not only visually appealing but also accurate and comprehensive, providing all the necessary information for the customer to make an informed decision.

What are the different types of CPQs?

CPQs are primarily divided into three broad categories:

1. CPQ for B2B —
   • CPQs for Non-B2B SaaS  — Traditional CPQs fall into this category as they were built to handle the requirements of Non-SaaS B2B Enterprises, i.e., non-recurring and CRM-only sales channels. These tools don't manage SaaS workflows well.
     • Example vendors: DealHub, Salesforce CPQ (works only if your CRM is Salesforce)
     • At the lower end of the market, you'll find various vendors such as HubSpot Quotes (which functions exclusively with HubSpot CRM) and numerous smaller vendors available on the Salesforce AppExchange.
   • CPQs purpose-built for SaaS — This is a new category of CPQs that help you completely automate all SaaS-related workflows — amendments, renewals, provisioning, etc.
     • Example vendor: MonetizeNow.
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2. CPQ for Services — If your entire business model is around selling professional services, i.e., pricing depends on project length/man-hours, then CPQ for Services is needed.
   • Example vendors: Provus, etc.
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3. CPQ for Heavy Configuration — Certain industries require thousands of lines of product configuration in the Quote, e.g., assembling a truck. Such use cases require a purpose-built CPQ to handle the complexity in the "C" of CPQ.some text
   • Example vendors: Oracle CPQ, SAP, Tacton, Veloce, Logik.io, etc.

What are alternatives to using a CPQ?

Google sheets, Powerpoint, Keynote, Excel -- essentially any document generator can be used to present a Quote to the end-customer and is the easiest way to get started.

Key issue with this approach -- there are no pricing controls, data is not synced to your CRM, upsells/renewals become super challenging.

Essentially, this approach fails to scale past a few customers.

What are the Benefits of Using a CPQ? 

‍Increased Efficiency: One of the biggest benefits of using a CPQ is the increase in efficiency it brings to both your sales team, and the sales process as a whole. By automating your configuration, pricing, and quoting, your CPQ eliminates the need for manual processes and reduces the time it takes to close deals. Your sales team can focus more on prospecting, and building relationships with customers rather than getting bogged down by endless administrative tasks

Improved Accuracy: Human errors, like rogue discounting and inconsistent quotes, can lead to costly mistakes and dissatisfied customers. A CPQ platform ensures that all configurations and prices are accurate, and following your predefined rules and guidelines. This not only enhances your overall customer experience but also builds trust and credibility for your business.

Enhanced Customer Experience: Providing a superior customer experience is crucial. CPQ software enables sales teams to respond quickly to customer inquiries, offer customized solutions, and present professional quotes in a snap. This level of responsiveness and personalization can significantly improve customer satisfaction and loyalty.

Better Analytics and Insights: CPQ software often comes with robust analytics and reporting features that provide valuable insights into your sales teams process. Your business can track key metrics such as quote-to-close ratios, pricing trends, and product popularity. These insights can help in making informed decisions, optimizing the sales process, and identifying opportunities for growth.

Scalability: As your business grows, so does the complexity of your sales processes. CPQ software is designed to scale with your business, accommodating new products, pricing models, and market conditions. This scalability ensures that your sales process remains efficient and effective, regardless of the size or scope of your operations.

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‍About MonetizeNow

Founded in 2021, MonetizeNow is revolutionizing GTM operations for B2B SaaS Enterprises of any size.

Our AI-powered platform combines Quoting/CPQ, Metering, Billing, and Reporting, to deliver a truly plug-and-play Quote-to-Cash experience across all sales channels.