What Exactly is CPQ: Configure, Price, Quote? 

By Rick Merriman, Mobileforce Software

I was introduced to Configure, Price, Quote (CPQ) was right after college, before the CPQ software category officially existed. I was a sales rep for a growing computer distributor, selling complex Unix-based hardware and software for client-server environments serving Value-Added Resellers (VARs). 

In my first sales role, our team had access to an application that allowed us to generate quotes with pricing and real-time inventory access. The application was home-grown, written in a language called 4th Dimension (4D) for Macs, known for its sleek GUI (graphical user interface), which made it extremely user-friendly. However, we still needed hard copy vendor price books for reference. 

At the time, this was all I knew about quoting: it was easy. I could generate a quote and multiple versions for the same opportunity. Little did I know, this application was years ahead of its time. Unfortunately, due to data bandwidth issues, the application couldn’t scale across multiple office locations, and we had to resort to a character-based application where quotes were manually generated offline. 

After years in sales, I moved into a marketing role, closely tied to CRM but far removed from the quoting process. With advancements made in Marketing Automation and CRM, I always thought it was easy for sales teams to generate quotes. I believed the lead-to-cash process was seamless and that problems with closing business were due to poor lead quality, which is partly true. It wasn’t until a subsequent role that I realized a poor sales CPQ process also contributes to a longer sales cycle, low win rates, and revenue leakage…a detrimental impact on the customer experience and those supporting the sale function. 

How could that be? How can companies allow their teams to manually quote using Excel, send emails, and monitor their inbox for approvals, and wait days or weeks to generate a proposal?  

Today, I am grateful to have joined Mobileforce, with our no-code CPQ and to have come full circle. Sure, I had to reacquaint and then immerse myself with the quote-to-cash category, which has been great.  Let me share what I’ve been absorbing. 

What Exactly is CPQ? 

CPQ stands for “Configure, Price, Quote,” and it refers to a software solution coupled with a sales process to help companies streamline and automate the configuration of complex products or services, pricing them accurately, and generating compliant quotes for customers. The goal is to remove manual processes and provide sales with autonomy to price and generate error-free quotes and proposals in minutes. And, to enable sales administrators and Revenue Operations the ability to self-manage and maintain the application to maintain the pace of change with their business. 

CPQ systems are commonly used in industries where products or services have multiple configuration options and pricing variables, such as manufacturing, telecommunications, and software to name a few. 

• Configure: CPQ software enables sales teams, partners, and even customers to configure products or services according to their specific needs. This may involve choosing different features, options, and customizations, often within a set of predefined rules and constraints. The software ensures that the configured product or service is valid and error-free. 

• Price: CPQ solutions allow businesses to establish and manage pricing rules and structures. For some organizations these rules can be quite complex and may involve factors including product configuration, quantity, discounts, various pricing strategies, and even inventory levels. The software calculates the price of the configured product or service in real-time based on the specified parameters. 

• Quote: CPQ software generates accurate and complaint quotes, proposals, and other sales documents based on the configured product or service and the calculated price. These documents can be customized to include branding, terms and conditions, special offers, and other relevant information. The goal is to provide customers with clear, compliant, standardized, and professional output documents to help close deals more efficiently and effectively. 

What are the key benefits of CPQ and why is it important? 

CPQ offers a range of benefits for companies, both the sales team, and sales operations and administrators.  Here is a list of benefits: 

• Efficiency and Accuracy: CPQ streamlines the sales process by automating the configuration of products or services, pricing, and quote generation. This reduces the chance of errors and ensures accurate quotes and proposals, saving time and effort for sales teams. 

• Reduced Errors: CPQ minimizes errors in the configuration, pricing, and quoting processes, leading to more accurate and consistent proposals. 

• Consistency: CPQ ensures that quotes and proposals are consistent, holding to your company’s pricing and product/service configuration rules. This consistency helps maintain a professional image and builds trust with customers. 

• Faster Sales Cycles: Automation speeds up the sales cycle by enabling sales teams to create quotes quickly and respond to customer requests more efficiently.  

• Improved Pricing Strategies: CPQ software allows companies to implement dynamic and data-driven pricing strategies, which can lead to better profitability and competitiveness. 

• Cross-Selling & Upselling: CPQ systems can recommend additional products or services that complement what the customer is interested in. This feature can increase sales revenue by encouraging cross-selling and upselling initiatives. 

• Enhanced Customer Experience: Customers can get quotes that reflect their specific needs and preferences, improving their overall experience with the company. 

• Better Visibility & Insight Development: CPQ systems often provide valuable data and analytics on quoting and sales activities, helping companies make informed decisions and optimize their sales processes. 

What should you look for in a CPQ solution? 

Selecting the right CPQ solution for your company is crucial to ensuring a seamless and effective implementation. Do you have questions about CPQ and how your company might benefit? Click here to learn more.