What is CPQ and Do You Need It?

What Is CPQ?

CPQ (configure price quote) software is technology that helps businesses produce sales quotes for their prospects. The right price can depend on a number of variables, including competition, local economic factors, and the costs associated with production. Products and services that are highly customized can also be difficult to price accurately. CPQ software is an attempt to address these problems, allowing companies to quickly come up with accurate price quotes.

Why Use CPQ?

Many companies choose to start using CPQ when their product offering grows. When your organization offers a very wide range of products or services, it can be difficult to manage product pricing. In particular, it's tough to keep track of external factors, such as special offers from competitors, and work out how these should affect the pricing of your own products.

CPQ software can also be useful for companies that need to calculate prices quickly. In situations where a sales rep needs to quickly prepare a quote for a customer, CPQ software automatically pulls together all the important information, allowing the rep to produce the quote and get back to the customer as soon as possible. For organizations that operate in fast-paced markets, speed is important.

Many global businesses use CPQ, as it allows them to quickly and efficiently send out pricing data to hundreds of local stores. As a result, the head office knows that every store contains goods that are suitably priced, without having to spend time manually calculating the right price for every item. For these businesses, CPQ can help to identify prices that could lose the company money, so they can be corrected as soon as possible.

Is CPQ Necessary?

Not always. In fact, not even in most situations. The majority of businesses are able to manage pricing and produce quotes without using CPQ. It's clear that the software is useful in certain situations, such as large organizations that have very broad product ranges, but most businesses are not in this situation.

If you don't have thousands of products in your range, then CPQ is probably not necessary for you. If your sales reps are able to develop quotes for customers without making serious errors or losing prospects due to the process taking too long, then CPQ is likely to bring you only marginal benefits.

When deciding whether to invest in CPQ, you need to weigh up the potential benefits of the software against the costs. If your business is small and your product line relatively simple, then it could be that the marginal financial benefits that your business reaps from more accurate pricing may not be worth the cost of CPQ.

Do You Need CPQ?

If you're not sure whether your business needs CPQ software, talk to your sales reps. Do they regularly run into problems with developing accurate price quotes in the time frame expected by the customer? Do those problems prevent the sales reps from doing their jobs or lose the company significant amounts of money?

Also, look into the costs of CPQ. Work out how much the software could save you and ask yourself whether it is worth paying out for it. CPQ is a great technical solution for those businesses that need it, but it's not necessary for every organization.

Interested in learning more? Watch a short demo of Zuora for Salesforce, a native force.com subscription quoting application, designed to handle subscription quoting, including mid-term upgrades, downgrades, cancellations and renewals.