What is CPQ Software?
Probably you’ve already heard terms like CPQ software, price management, software, or price optimization software. And probably you’ve always wondered what is a good choice or fit for your company’s needs? My name is Milan Haba. I’m from Pricefx’s, Product Marketing Department. And in this video, you will learn what CPQ software is. What is it good for? And what are the typical situation where CPQ software is a good choice for you?
What is CPQ?
CPQ stands for configure price and quote. So let’s start with the C configure. If you receive a purchase inquiry from your customer, first of all, you have to put all the product items into the quote, which are of interest to your customer. The specific case, when you can utilize CPQ software is when your products are based on the configuration. Just imagine the situation when you are buying a new car, it is not just buying some universe of car. Quite often, you choose the color of the car, the engine of the car, and a lot of features, which are quite optional to the product. And what CPQ makes sure of is that if you select some optional features of the product, it also verifies the compatibility with some other optional features, which must be followed when it comes to P price. It is quite often the case that you provide various customers with individual pricing.
It means that for example, some specific customer sub-segment end from your portfolio has different prices than some other segments of your customers. And when it comes to Q quote, it is about the calculation of the quote and supplementary functionalities like the electronic signature of the quote, graphical design of the quote and other functionalities, which you can as part of the overall CPQ software, of course, you can create quotes also, for example, in spreadsheets software. But the problem comes when your portfolio includes thousands of products. And especially in the situation when your products include various configurations. And just in that, your one product can have some optional features like the color, but these various features are available. Only if you go for some other features, we call this compatibility of these features and to make sure that you design the quote without any errors in spreadsheets, the software is basically impossible.
The says where CPQ software can help you, and it can make sure that order rules like compatibility of the features will be followed. CPQ software helps you to streamline the code design process because you can do everything in one place. You start with the design of the quote, you continue with the calculation of prices, calculation of the overall quote, and then you can use also other supplementary functionalities, like the approval workflows signature. You can put the quote into some nice graphical layer out and other things, and there is a lot more what CPQ software can do for you. For example, product recommendation in an automated way, you can add products into your quote, which are complementary to the other products, which are already placed in the quote, or you can utilize approval workflows. It may mean that if the size of the quote reaches some threshold, it must be approved. For example, by the manager of the sales representatives.
What CPQ Software is Not
CPQ software is not a magic bullet, but it can provide useful guidance for your salespeople. Just example the pricing to make sure that you provide the specific customer with the right price, which maximizes your profit is good guidance. CPQ software also makes sure that your salespeople will not make accidentally any error errors. Just consider the configuration phase of the quote preparation. If you are product enables some configurations, you can add some optional features and there are some compatibilities between these optional features. CPQ software makes sure that there will not be any mistakes. And all these compatibilities use and conditions will be always followed.
Is CPQ Software Right for Me?
CPQ software is ideal for companies who sell based on individual quotes and their portfolio includes thousands of different products or possible configurations of products. Also, CPQ software is ideal when you sell to hundreds or thousands, of various customers, and you want to provide various customer sub segments in various regions with unique and differentiated pricing. CPQ software is suitable for you when you sell based on an individual quote, if you sell based on a more universal price list and you share these price lists with your customer, then price management software is a better choice for you. Of course, the usage of CPQ software and price management software is not in contradiction. There are cases where customers companies sell in both ways. They serve part of their customer portfolio through individual vaults while they sell some other part of their portfolio through more universal price lists. And now let’s look at the situations where CPQ software is not a good fit for you.
If you sell based on a generic price list and you share the complete price list with your customers, you basically don’t need CPQ software. This is the situation where you could rather utilize price management software. Also, even if you create an individual goal, but your product portfolio includes just a few items or you are not using the configuration of your products at all, then maybe you can do this job. For example, in the spreadsheet software, basic CPQ software will not help you. For example, in the setup of discount or rebate agreements with your customers and with their execution. Also, basic CPQ software does not include any analytics. Definitely. If you do your business, you want to know how well you are doing your business. You want to learn from the numbers and do it better in the future. Basic CPQ software cannot do these things for you. So today you have learned what CPQ stands for, what CPQ software is good for, and what is the typical situation when you can utilize CPQ software?
Well, also now, you know, when CPQ software is not a good choice for you, if you want to learn more on CPQ software, visit our website and specifically its learning center, you will find a lot of useful content. There. We have videos, article e-books other types of content. For example, if you want to learn, what’s the difference between CPQ and price management software. We have a great article for you there. If you want to stay updated on pricing, subscribe to our YouTube channel, and you will make sure that you will see our follow videos as well. Thanks and have a great day.