Configure, Price, Quote (CPQ) software helps businesses generate quotes and proposals for customers. You can do this work manually, filling in each field one by one as you work through quotes for what could be hundreds of customers. However, using software saves time while increasing accuracy and improving the customer experience.
CPQ software is becoming increasingly popular among companies in multiple industries. Statistics show that, on average, non-CPQ users take 73% more time to quote a proposal. Additionally, CPQ users see a 17% higher lead conversion rate.
How exactly do CPQ solutions work? And could you benefit from this type of software? Here’s our in-depth explanation of everything you need to know about CPQ software.
What is CPQ?
CPQ is a Configure, Price, Quote tool that quickly creates quotes for your services with customized and consistent pricing.
Creating quotes for them has become more challenging as technology products become more complex and customizable. Using CPQ software, you can automate the entire pricing and quoting process and save time. This allows you to create more advanced quotes that you can feel confident are still accurate and fair.
CPQ software helps you:
- Automate the sales process: There is no need to manually fill in field after field. CPQ software automates routine tasks like analyzing data or configuring a quote — and then does it again, creating a repeatable, hands-off process.
- Streamline pricing and quoting: Consistently scope and price IT projects using “plug and play” features where you add custom project details, and the software immediately generates a quote.
- Generate proposals: Instead of writing a sales proposal from scratch, use CPQ software for proposal automation, improving service margins, efficiency, and collaboration.
Let’s take a deeper look at how each aspect of the CPQ process works.
CPQ software allows sales reps to configure solutions quickly based on customer needs. This eliminates errors and inconsistencies in solution configurations, especially when solutions are customizable.
For example, a business customer may need a customized IT solution encompassing servers, software licenses, and networking equipment. A CPQ system would allow the customer to configure their ideal IT setup, including the number of servers or the type of software licenses. The customer can specify exactly what they want.
Once a customer has modified their product, you are responsible for providing a custom quote. But if you offer customizable solutions, these can be challenging to price. CPQ software automates your pricing based on the product configurations, customer requirements, and pricing rules you’ve set so your pricing remains consistent and accurate across all sales channels.
A CPQ system uses predefined pricing rules to calculate a total cost automatically as the client selects different components and quantities. If you offer tiered, bundled, or subscription pricing, your CPQ system will use the model you’ve pre-set. The software also considers volume discounts, contractual agreements, and other special pricing arrangements. And you can enter the software and tweak your pricing at any time.
The final step in the process is generating a quote. CPQ systems automatically generate professional quotes with detailed product descriptions, pricing information, terms and conditions, and sales proposals.
You will receive a branded document with all relevant information, including the terms and conditions of the sale. CPQ software also improves efficiency by generating quotes in just a few minutes, helping you close a deal more quickly.
How does CPQ software work?
CPQ software begins by allowing the customer to configure the specifications of their desired order.
Next, the software uses the predefined pricing rules you’ve set to generate a price in real-time for the customer as they are configuring their product. These pricing rules might include volume discounts or tiered pricing. You can view the final price and immediately send it off for approval.
Finally, once the initial pricing has been approved, the CPQ software will generate a quote. This quote will include information such as product timelines and payment schedules. Once again, you’ll review and approve the quote before sending it to your customer.
At the end of the day, CPQ software follows the same basic configure, price, and quote process — but runs through the sequence much faster and more accurately than humans can.
Benefits of CPQ software
The most apparent benefit of CPQ software is increased productivity and efficiency thanks to its automation features that shorten the sales cycle and help your team close more deals. CPQ software also helps you provide an enhanced customer experience by offering a customized quote more quickly.
Increased sales productivity
Using a CPQ system speeds up your entire sales process. In our experience, ScopeStack CPQ users see an average 90% reduction in document management time. Your sales reps won’t need to spend valuable work hours on manual calculations and paperwork. The software does this for them. Instead, your reps can focus on important tasks like forging customer relationships. This helps reduce the sales cycle time while closing more deals.
Improved accuracy and consistency
A CPQ software eliminates errors and inconsistencies in pricing and quoting, so every customer receives accurate, consistent pricing information.
ScopeStack users see an average increase in margins of about 50%. Our platform offers visibility into the scoping process, providing users with a common language to ensure that what’s promised is the same as what’s delivered.
Enhanced customer experience
As you provide your customers with accurate, helpful information — like an immediate quote or a personalized list of best options — your customer experience will naturally improve. A CPQ system helps you provide clients with professional, personalized options. This valuable service improves customer satisfaction and loyalty, leading your clients and customers to return to you again and again.
Which industries can benefit from using CPQ solutions?
CPQ software is for any organization that must deliver complex pricing to customers. Switching to CPQ software can benefit companies whose sales teams spend time generating quotes and pricing for clients. Many businesses in various industries use complex pricing models that mesh well with a CPQ. However, three industries stand the most to gain from using CPQ software:
- IT service providers: As an IT service provider, you offer your clients a wide range of customizable solutions. You regularly need to price and quote complex solutions accurately. This is precisely what CPQ software is made for.
- Manufacturing companies: Manufacturing companies also provide a variety of product configurations and options. You need to manage product pricing and availability efficiently.
- Software companies: If you’re a software company selling subscription-based software products, you must manage pricing and billing for different subscription plans. A CPQ solution can help you keep everything straight.
Integrating CPQ software with your CRM and ERP
Once you’re set up with a CPQ software, the next step is integrating the software with your existing CRM. CPQ software can integrate with CRM systems to access customer data. This helps centralize the data so sales reps can easily find and update customer information. This streamlines the sales process, allowing reps to create quotes and proposals directly from CRM records.
Your ERP system comes into play here, too. ERPs and CPQs go hand-in-hand: By integrating your CRM and ERP systems, you can streamline your entire sales and fulfillment process more efficiently, thanks to the visibility you’ll gain.
Popular ScopeStack CRM integrations include:
Integrating your CPQ solution with your CRM makes your job even more manageable as you seek to quickly find the right products for each customer and send them accurate quotes, with analytics information available after each proposal so you can see where you need to improve next time.
CPQ software vs. Excel
You don’t have to use CPQ software, but this likely wouldn’t be the smartest choice for your business. You could turn your sales team loose to configure, price, and quote proposals on their own. However, Excel spreadsheets are difficult to maintain and prone to errors, especially if multiple people access them. CPQ software provides a more structured, reliable approach to pricing and quoting.
With a CPQ system, you’ll also get access to a wider range of features. You can automate product configurations, pricing rules, and quote generation and get real-time insights into sales performance. CPQ software is essential for IT service providers who sell complex solutions.
How to choose CPQ software
With many CPQ options, choosing the right software can be daunting. You’ll want to make a decision that aligns with your business needs and goals and scales with your business growth.
Here are four considerations to keep in mind when choosing CPQ software:
One of the most significant benefits of CPQ software is how it automates the sales cycle, saving time and improving accuracy. Any good CPQ system should produce quotes and pricing quickly and easily.
Choose a solution that can scale and grow along with your organization. You want to commit to a single software that you can use long-term.
Ease of use
There’s no need for software full of elaborate, unnecessary features. Straightforward is best. You want software with responsive customer service, tutorials, and integrations with tools you already use so your entire team can willingly and easily adopt this new system.
Finally, you want a solid ROI from using this software, so choose an option that fits your organization’s budget. Many software use a subscription-based payment model. With this type of pricing, you pay a recurring monthly or annual fee at a set pricing tier or based on the number of user seats.
How ScopeStack’s CPQ software can benefit your IT business
ScopeStack offers a comprehensive CPQ solution specifically designed for IT service providers. Our platform streamlines the sales process, improves accuracy and consistency, and helps enhance your customer experience.
ScopeStack’s automation features help your company scale and grow. Automate the SOW process and spend as little as 15 minutes on each scope while still feeling confident that each scope will be consistent and accurate. Our software integrates with tools you already use, like HubSpot, Microsoft Dynamics, and DocuSign. With ScopeStack, your customers will get what they need, and you and your team will have more time to serve them.
Want to learn more? Contact our team and see how you can tap into the full power of Configure, Price, Quote software.
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