What is CPQ software?
Why use CPQ software?
CPQ software enables your sales team to quote complex products and services quickly and accurately. When sales reps use CPQ software, errors and quote turnaround times are reduced. Companies that implement CPQ eliminate friction in the buying process and set better expectations for their customers.
An alternative to CPQ software is a manual process where sales reps have to fulfill customer requirements by going through complicated spreadsheets or contacting different departments. They may have to send the customer specifications to an engineering department to determine the requirements for the project and contact supply chain management for pricing. This process can take days or even weeks before the sales representative can provide the customer with a quote - the more complex the product and process, the greater the likelihood of human error or misunderstanding.
Another alternative to the CPQ is a stand-alone configuration tool. This allows users to design the required product based on rules or parameters set by the manufacturer. A configuration tool often has fewer inputs than a CPQ, as it does not usually include raw material costs in the calculation. Nevertheless, a configuration tool is quite powerful and usually offers a 3D preview of the product, dynamic dimensions, rule-based price calculations and the output of CAD or BIM files. They are particularly useful for manufacturers of electrical and electronic components, mechanical components and architectural products.
Let's take a look at what each word in the phrase configure, price, quote means.
Configure
Configure in Configure, Price, Quote stands for a setof parameters that can be selected within the CPQ software, allowing salespeople to put together a complex product or service on-the-fly. These parameters can be product requirements, features, upgrades and more. A rule set governs which options work together to ensure that the salesperson only selects the product features that can be fulfilled by the company's implementation team.
When using such a tool, salespeople do not need the same training and expertise to offer a complex product or service.
Price
Price, in Configure, Price, Quote, stands for a set of rules that automatically generates prices based on a final configuration of a product or service within the CPQ software . The price rules within the CPQ software can come from a static price list or from dynamic market prices. Advanced CPQ can generate prices based on the cost of specific materials, such as aluminum, based on current market prices.
Quote
Quote, in Configure, Price Quote, represents the CPQ software's ability to generate a dynamic sales quote based on a specific configuration, including price. Dynamic quoting allows sales reps to respond to their customers' needs in real time and move the conversation from the world of thoughts and ideas to solid numbers.
Is CPQ worth the money?
CPQ software is effective because sales reps can quote accurate prices to potential customers and guide them to the solution that best meets their needs and budget. Plus, customers don't have to wait weeks for a quote on a project. Ultimately, CPQ software makes it easier for customers to work with you if you offer a complex product or service.
If you sell complex products that require a lot of work to create a quote and dynamic pricing, CPQ software is often a worthwhile investment. These products are often large machines or systems that can be configured, but often no two are the same.
BUT, CPQ is overkill for many product offerings. If you sell products that don't require dynamic pricing and benefit from a 3D preview, a standalone online 3D configurator may be a better fit.
Online 3D configurator vs CPQ software, which is better?
Online 3D configurators are better suited than CPQ software for products that do not require dynamic, market-based pricing. Online 3D configurators are generally best suited for component manufacturers, architectural manufacturers and customizable machines with standardized options.
