Businesses involved with sales understand how challenging the process of quoting can be. If your company offers a wide range of products, prices may vary greatly depending on specifications. Generating quotes manually, as is traditional, presents problems with accuracy and is very time-consuming. CPQ software can revolutionize your quoting process and truly benefit your sales organization.
What is CPQ, and how does it work?
CPQ (Configure, Price, Quote) refers to a software platform designed to aid sellers in generating precise price quotes for complex configurable items. With it, you can improve the efficiency of your sales cycles and increase productivity and profits. Expediting product configuration and proposals helps eliminate inaccurate quotes and offers your customers a better buying experience.
CPQ software involves a three-part process automated to streamline and accelerate your sales process. The three components are Configure, Price, and Quote. Let’s explore each.
The “C” in CPQ software refers to designing and producing products according to specific customer needs and preferences. Often, businesses sell items that can be customized or personalized by the buyer. The items may have a base price, but the quote will include any extra costs necessitated by the customization. Customizing can be a huge benefit to customers but can be time-consuming and laborious for sellers.
CPQ software automates the process of figuring out charges for products and services supplied according to customer specifications. This is done with the aid of base product models, libraries of approved options and configurations, and guided selling features. CPQ controls product and service options, available feature combinations, pricing, and discounting and automates quote processes, helping sales representatives quote fast and sell right – every time.
A CPQ tool will allow you to configure your product offerings so they exactly fit your customers’ requirements. And it will provide a straightforward way to construct, visualize and specify your product offerings. The right CPQ will make the entire process easy to navigate and control. You’ll reduce the risk of human error, and your sales team can spend more time connecting with customers.
The P in CPQ stands for price. Customized products require complex pricing structures.
If your organization offers flexible product options, it will be impossible to have set prices. The more options available, the greater the range of prices. Trying to predetermine prices before configuration is doomed to failure but pricing each item manually after the configuration will greatly slow down the delivery time.
This is where the pricing function of CPQ software comes in. Now you can automate the process to generate exact quotes for products based on the rules you enter into the software.
Some methods of pricing are:
: The price of an item changes based on customizations, size, quantity ordered, colors, finishes, etc.
: The price of items may be affected by discounts or special agreements with your customer.
: The price of an item is taken from price lists. The lists may reflect regional variations.
Cost + Markup
: The price of items starts with the seller’s cost and is marked up to reflect the profit margin.
Percent of Total
: The price of goods or services begins with the seller’s cost and adds a specific percentage to cover support or maintenance.
: The price of items begins with the list price but reflects discounts based on the quantity purchased.
: The price of items will vary depending on the length of a customer’s contract. Discounts may be given for longer or shorter terms.
: A price is set for a specific number of items, and the buyer must take them all.
The CPQ tool lets you offer a personalized, accurate price to your customers while maintaining your profit margin.
The final step in the CPQ process is the quote. Your customers will receive detailed estimates based on the configuration and the price. An accurate quote reflects your organization’s professionalism, and you will stand out, especially if customers request multiple quotes. The quote is a way for you to sum up what you are offering and your terms.
Due to the complex nature of configurable products, quoting can be challenging. Accuracy is essential, but without CPQ software, quotes can be time-consuming to compile and revise.
CPQ software, however, delivers a seamless, error-free way to generate and deliver personalized, accurate quotes. Salespeople can quickly review and adjust details before sending.
Configure, Price, Quote (CPQ) simplifies and speeds up your quote and order processes to help your sales representatives sell faster and more accurately.
If you’d like to know more about CPQ software and how it seamlessly integrates with your