Understanding CPQ: What Does CPQ Stand For & How Can it Benefit Your Business

Accuracy and efficiency when combined with speed is one of the most important things that will determine your success. CPQ software is one effective technology that businesses are using more and more to optimize their sales processes. But what exactly does CPQ stand for, and how can it benefit your business?

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What Does CPQ Stand For?

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CPQ stands for Configure, Price, Quote.

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It’s a powerful tool that assists your sales representatives in configuring deals, pricing them by incorporating discounts, ramps, terms and conditions, and generating a quote - commonly known as an Order Form. Once finalized, this quote can be sent to the customer via email or e-signature, provided the customer has previously agreed to the pricing and terms outlined in the quote. 

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CPQ software integrates with other systems, such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP), to provide an all-in-one solution for sales teams.

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What IS a CPQ? Let’s Break it Down:

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Configure: This stage involves customizing your sales process by configuring bundling, pricing, and rules of selling to meet the specific needs of a customer. Businesses often offer a wide range of options, features, and configurations for their products. CPQ software ensures that sales teams can easily navigate these options and create a product that aligns perfectly with customer requirements, reducing the risk of errors and improving customer satisfaction.

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Price: Pricing can be a complex process, especially when dealing with a large catalog of products, discounts, and special offers. CPQ software automates the pricing process by applying predefined rules, discounts, and pricing models. This ensures that the pricing is consistent, transparent, and accurate, helping to avoid costly mistakes and discrepancies.

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Quote: Once a product is configured and priced, the next step is to generate a quote. CPQ software streamlines this process by creating professional and detailed quotes that can be easily shared with customers. These quotes are not only visually appealing but also accurate and comprehensive, providing all the necessary information for the customer to make an informed decision.

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What are the different types of CPQs?

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CPQs are primarily divided into three broad categories:

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1. CPQ for B2B — This is the primary use case for buying CPQs. Generally speaking, a B2B company with multiple product offerings or $1M+ in revenue can benefit from a CPQ. CPQs in this category are further divided into two subcategories:
   • CPQs for Non-SaaS — Traditional CPQs fall into this category as they were built to handle the requirements of Non-SaaS B2B Enterprises, i.e., non-recurring and CRM-only sales channels. These tools don't manage SaaS workflows well.
     • Example vendors: DealHub, Salesforce CPQ (works only if your CRM is Salesforce)
     • At the lower end of the market, you'll find various vendors such as HubSpot Quotes (which functions exclusively with HubSpot CRM) and numerous smaller vendors available on the Salesforce AppExchange.
   • CPQs for SaaS — This is a new category of CPQs that help you completely automate all SaaS-related workflows — amendments, renewals, provisioning, etc.
     • Example vendor: MonetizeNow.
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2. CPQ for Services — If your entire business model is around selling professional services, i.e., pricing depends on project length/man-hours, then CPQ for Services is needed.
   • Example vendors: Provus, etc.
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3. CPQ for Heavy Configuration — Certain industries require thousands of lines of product configuration in the Quote, e.g., assembling a truck. Such use cases require a purpose-built CPQ to handle the complexity in the "C" of CPQ.some text
   • Example vendors: Oracle CPQ, SAP, Tacton, Veloce, Logik.io, etc.

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What are the Benefits of Using a CPQ? 

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Increased Efficiency: One of the largest benefits of using a CPQ is the increase in efficiency it brings to both your sales team, and the sales process as a whole. By automating your configuration, pricing, and quoting, your CPQ eliminates the need for manual processes and reduces the time it takes to close deals. Your sales team can focus more on prospecting, and building relationships with customers rather than getting bogged down by endless administrative tasks.

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Improved Accuracy: Human errors, like rogue discounting and inconsistent quotes, can lead to costly mistakes and dissatisfied customers. A CPQ platform ensures that all configurations and prices are accurate, and following your predefined rules and guidelines. This not only enhances your overall customer experience but also builds trust and credibility for your business.

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Enhanced Customer Experience: Providing a superior customer experience is crucial. CPQ software enables sales teams to respond quickly to customer inquiries, offer customized solutions, and present professional quotes in a snap. This level of responsiveness and personalization can significantly improve customer satisfaction and loyalty.

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Better Analytics and Insights: CPQ software often comes with robust analytics and reporting features that provide valuable insights into your sales teams process. Your business can track key metrics such as quote-to-close ratios, pricing trends, and product popularity. These insights can help in making informed decisions, optimizing the sales process, and identifying opportunities for growth.

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Scalability: As your business grows, so does the complexity of your sales processes. CPQ software is designed to scale with your business, accommodating new products, pricing models, and market conditions. This scalability ensures that your sales process remains efficient and effective, regardless of the size or scope of your operations.

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Incorporating CPQ software into your sales process can provide numerous benefits, from increased efficiency and accuracy to enhanced customer experience and better insights. By understanding what CPQ stands for and how it can benefit your business, you can make an informed decision about integrating this powerful tool into your operations. Whether you are a small startup or a large enterprise, CPQ software can help streamline your sales process, improve customer satisfaction, and drive business growth.

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Are There Multiple Uses for a CPQ?

1. Resellers — Smaller resellers typically prefer to quote directly from your CPQ. Larger resellers like CDW or DimnesionData like getting the product/pricing feed from the CPQ (through APIs) and quote from their internal CPQ system
2. Self-serve Quotes— For large invoice amounts (typically >$5000), it is likely that the end user cannot use their company credit card. Instead, they may be required to generate a quote and submit it for approval from their internal procurement department (see below)

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What is an Alternative to Using a CPQ?

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Early-stage companies typically use a manual order form instead of a CPQ. A manual order form is a Word/Excel/Google Doc/Google Sheet document that lists product pricing and basic terms and conditions. It works initially as this solution is entirely free and very easy to get started with. However, manual order forms stop working as you scale and add friction to your revenue growth.

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About MonetizeNow

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Founded in 2021, MonetizeNow is revolutionizing GTM operations for B2B SaaS Enterprises of any size. At MonetizeNow, our mission is simple: to make B2B commerce completely frictionless and provide a delightful experience for your customers to do business with you. 

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Our innovative platform combines Quoting/CPQ, Metering, Billing, and Reporting, to deliver a truly plug-and-play Quote-to-Cash experience across all sales channels.

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It’s time to empower your Sales, RevOps, and Finance teams with an all-in-one solution that will revolutionize your entire business. Reduce manual tasks, allowing a stronger focus on strategic pricing and innovative GTM strategies. Generate complex quotes quickly and enjoy full automation of your billing processes. Easily handle proration, co-term agreements, and renewals for seamless operations.

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Get back to focusing on value. If you can build it, you can sell it with MonetizeNow.