What is CPQ and How Does it Work

CPQ software allows sales teams to create quotes with consistent prices, including authorized discounts, quickly and accurately.

14:31 09 November 2021

With all the different tools and software available today, it is difficult to imagine a business that has difficulty providing fast sales quotes. However, many companies have trouble providing accurate and professional quotes quickly. 

 

Although the problem has existed for a while, many sales managers still do not know how to solve it effectively. And that's why the CPQ market (Configure Price Quote) is so promising right now.

 

So, what is CPQ software?

In simple terms, CPQ software helps you manage the prices of your offers from all your products and services. The software allows sales teams to create quotes with consistent prices, including authorized discounts, quickly and accurately. 

 

Advanced pricing rules can be defined to manage volume discounts, the percentage of total subscriptions, pre-negotiated contract pricing and distribution channel pricing and partners.

 

By using the CPQ software and Autodesk CPQ, companies can make sure their quotes are accurate and optimized and also the productions drawings and models. Human error is the main problem associated with the fast and reliable generation of quotations. The CPQ is a software category that tackles the front of this challenge.

 

Will CPQ go to make my work obsolete?

Although automation is the key to many business software solutions, it does not make the work of obsolete sales professionals. Human intervention will always be needed in the sales process to understand and capture the increasingly complex needs of industrial solutions.

 

Artificial intelligence. Regardless of the type of technical support you use, it is difficult to escape the subject of artificial or increased intelligence (AI) nowadays. As a result, you will hear more and more about the IA deployed uniquely in business applications, including CPQ. As people get used to having virtual assistants (like Alexa, Amazon) in their daily lives, they will start asking for more of these capabilities at work.

 

E-commerce

The use of the CPQ software for e-commerce websites is a dream of many providers for a while, but it always requires more work. To truly allow customers to use it, it is important to ensure that an end-user is able to use the system without training. To reduce the maintenance of an e-commerce CPQ solution, the CPQ software should be made available to all users with the desired customer experience. Simplified user interfaces and feature enhancements should make this task more accessible to business users.

 

Integration of CRM, CPQ and ERP. The integration of data between these systems is easier nowadays. For this reason, we will see more and more CRM and ERP solutions providers develop either more robust internal solutions or acquire better software providers. Today, CPQ solutions can be said to stay, especially since these types of software solutions have changed into the essential option for many organizations.

 

The 4 Step CPQ Sales Process

The sales process can be broken down into four key steps:

 

Step One – Salesperson Clarifies the Customer's Needs. 

The sales person needs to make sure they understand all of the customer’s requirements and figure out what is most important. For example, if a carpenter was building cabinets for an office space, he would first need to find out which type of wood the customer prefers. It wouldn’t make sense to use plywood, which is a lot less sturdy. In addition, the customer would want to know how quickly they need it done and if there were any other specifications that would affect the process.

 

Step Two – Salesperson Configures a Solution.

The sales person then configures a solution that best meets all of the customer’s needs and requirements in order to meet their budget. In our example, this would involve figuring out which types of wood would best meet the customer’s budget while also matching their preferences. The sales person would then configure a solution based on this information.

 

- Example of configured wood types: maple, oak, and mahogany

- Price per square foot for each type of wood ($20 - $25)

 

The customer is satisfied with the final product because it meets all their requirements while also fitting into their budget. The salesperson was effective in using the software to configure a solution.

 

Step Three – Salesperson Quotes a Price. 

Now that a solution has been configured, the sales person can then quote a price for all of the materials and labor required to build or install it. In our example, this would mean pricing out all of the materials and labor associated with building or installing the wood cabinets.

 

The configuration process is an intuitive and interactive way for salespeople to find a solution that best meets their customer’s needs. The software helps them configure, price and quote products in order to close deals faster while reducing errors along the way.

 

Step Four – Salesperson Negotiates a Deal. 

The sales person then negotiates with the customer to finalize any deals that will affect the price of materials or labor. For example, if there are certain discounts available for customers who order during specific times of year, this would be brought up in negotiations along with other items such as warranties or guarantees.

 

The customer would like to negotiate the final deal by reducing some fees but is happy with most other parts of it because it meets all his needs and requirements, and falls within his budget. The salesperson was effective in using the software to negotiate a deal.

 

Conclusion 

In summary, CPQ stands for configurable product pricing and quoting. It is a software solution that helps e-commerce websites to create, price and quote products with greater speed and accuracy than if they were manually building custom quotes. This type of technology may not make your work obsolete, but it will enhance the process you use when creating customized packages for customers who are purchasing different quantities or combinations of items in their cart. The 4 step CPQ sales process outlines how this system works and what benefits it can provide an organization's bottom line.