What Is the Difference Between CPQ and Pricing Software?
Metrics and overall performance can measure a software’s efficiency, and CPQ solutions can boost sales teams’ proficiency by 45%. Now that you know what a CPQ can do for your business, another question that begs an answer is the difference between CPQ and pricing software. You may be uncertain about the need for pricing software since a CPQ solution can boost your sales team’s proficiency. But, most organizations prefer straightforward solutions when it comes to investing in applications. They want to look at the possible outcomes of each software and avoid automating too many efforts.
Since B2B pricing primarily focuses on selling numbers and gaining a competitive advantage, this article will focus on differences and similarities. We will be discussing what both applications can do for your business.
What Do You Get with CPQ?
Configure, Price, Quote solutions are designed to help you streamline core pricing processes for your customers. CPQ enables you to keep prices updated with current market conditions. CPQ users improve customer retention by 3.9% annually, while non-users report a 0.6% decrease.
Most successful sales teams streamline their sales workflow by reducing administrative tasks and other red tapes associated with getting complex B2B deals done. With CPQ, you can confidently set the correct prices and offer a personalized sales experience for your customers.
A good CPQ solution provides insights and recommendations based on historical sales data, increasing your sales opportunities. Just as its name implies, the solution enables you to scale quickly through specific configurations. You’re able to configure a particular product portfolio (based on your overall product catalog), set related pricing, get internal approval for outputs, negotiate with customers and re-iterate on specific quote conditions.
A good CPQ reduces errors in sales proposals and contracts. B2B companies thrive when they reduce mistakes and ensure a smooth sales process. For instance, if your loyal customers keep getting error-filled proposals, they can get disinterested in your service in the long run. CPQ users enjoy improved proposal quality more than double when compared to non-users.
One of the focuses of sales is converting and retaining more buying customers. Overall, a good CPQ helps your sales performance, bolstering the sales teams. With CPQ, you get more accurate quotes to your customers faster, giving you the competitive edge for winning more opportunities and increasing deal size.
Why Do You Need Pricing Software?
Pricing dictates a lot about your product. Like most modern applications, pricing software is becoming a part of organizational set-ups.
Unfortunately, most people think pricing software is a cure-all solution for all their sales challenges. Although most pricing solutions boast multiple functionalities, they are not cure-all solutions for all sales challenges.
When it comes to pricing itself, pricing software covers a lot of ground. A pricing solution could help you manage your price lists, automate your pricing triggers, and fully control price-related campaigns.
Profit margin leakage is a common challenge for B2B companies, resulting from misaligned pricing. With a pricing solution, you can minimize risks associated with pricing inconsistencies. E-commerce businesses can also manage their product portfolio effectively through a pricing solution. A pricing solution considers information from customer segments, product groups to arrive at the correct prices at the right time, allowing you to calculate prices optimally.
The main advantage of pricing software is that you can leverage artificial intelligence to optimize prices and react swiftly and appropriately to your competition and the market. It also allows you to plan a more profitable pricing strategy and make data-informed pricing decisions that drive revenue growth.
Pricing has significantly improved through advanced technology. With artificial intelligence, more pricing solutions can cater to the broader needs of the B2B audience and can be cloud-based.
Unlike traditional pricing software, cloud-based pricing solutions offer a holistic approach to pricing. Users can run simulations on actual customer scenarios to arrive at pricing decisions. Hence, reducing errors and tailoring solutions to meet the needs of customers.
Advanced pricing solutions enables you to
- Test new pricing policies before implementing
- See the simulated pricing impacts and make immediate decisions on execution
- Adjust input attributes or new price calculation logic
This new generation of pricing software enables superior price optimization through predicted end-to-end impact simulations. These simulations ensure that your pricing decisions are tailored to your business strategy.
Pricing Software vs CPQ
Both solutions can be instrumental to your business growth. CPQs are most helpful to companies selling based on customer-specific quotes, while pricing software is most relevant to companies selling based on price lists (global, per region, etc.).
We recommend that you use the solution that best suits your business model.
For those looking to learn more about the postive impacts of the solutions on your business growth , check out our recent article on the Advantages of Price Optimization and Management Software.