• Jonathan Bradley

WTF is CPQ?

The answer: Configure. Price. Quote.


If you are involved configuring products or services, calculating prices and providing quotes, this could be an extremely valuable read.


The more complex your product or bundles, and the more time it takes for you to raise a quote, the more this will interest you. And if your customers demand fast quotes, then by now you should be drooling.


So, what is CPQ?


CPQ is relatively new cloud technology.


It makes the job of building quoting quicker, with greater accuracy and improve control over pricing.


How does it work?


Let's take a typical manufacturing firm who make bespoke products for resellers.

Their quotation process may look something like this:

So, the pain points are:

  • The customer can ask for something that cannot be made.

  • Every quotation needs to be designed or costed out - let's hope you have a very high conversion rate; else this time is often wasted.

  • Pricing needs to validate every quote.

  • The customer may receive quotes from competitors more quickly.

  • Each stage is open to human error.

  • Pricing is likely depended on complex spreadsheets or inadequate systems.


CPQ makes this entire process, quicker and more accurate. Here's what happens.


Set up:

  • You would create pre-designed templates.

  • These templates are a sequence of questions needed to collect enough details to produce a quote.

  • The questions and answers are structured in such a way that the product cannot be mis-configured at the first stage.

Output:

  • A bill of materials is instantly produced.

  • A price is instantly produced

  • A quote is instantly produced.

So once implemented, the quotation process now looks as follows:


The difference is striking, and completely available to you.


Clearly there is a bit of setting up to be taken care of before your CPQ software can give you the benefits, but the benefits could be huge.


What are the benefits of adopting CPQ?


Everpro have implemented a number of CPQ solutions, and the customer benefits have been:

  • Competitive advantage through being first to quote

  • Less payroll cost on quotations, more on business development

  • Increased customer satisfaction

  • Increased reach though placing CPQ online for customers

  • Reduced waste by increased accuracy

  • Better ability to control margins

  • Simple deployment of new products

Why are CPQ engines not popular?


They are becoming popular. CPQ engines have not been around for ever. And due to computing power needed, over the last 20 years they have been a privilege afforded by the largest of companies. Car manufacturers are a prime example.


But that has changed over the last 5 years or so.


Internet speeds, internet browser power and the increasing popularity of software as a service payment model (small monthly lease payments per user with minimal commitment) have widened the availability of CPQ to the SME market.


And now it is big business.


The cloud CPQ industry is now estimated at over $1bn and expected to grow at 20% per annum.


You may or not be considering CPQ at present. But you are highly likely to hear about this again in the near future. As will your competitors.


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