Best CPQ Software in Comparison

CPQ Definition: What is CPQ and why is CPQ software needed?

CPQ is an acronym for the terms "Configure," "Price," and "Quote". Translated, this term chain means something like "configure pricing". More specifically, this refers to the sales process in which individually tailored goods and/or services are selected for customers and the optimal price is compiled for a quote to be sent out.

CPQ tools broadly support sales teams with the tasks of the corresponding work. Since a quote is created in the end, such solutions are sometimes simply referred to as quote software. But in fact, they can do much more than just "assist" in creating quotes.

In fact, CPQ software largely automates the quote process. Ideally, sales representatives should be able to submit a perfectly suitable quote to all their customers without much effort. With just a few clicks, salespeople are able to complete quotes, send them directly via email or previously affix them with an electronic signature.

CPQ software assists in the management of pricing for all products and/or services of the respective company. It enables salespeople to set up completely individual quotes with consistent pricing within minutes - including available discounts. Advanced pricing rules can be configured to consider bulk discounts, percentage subscriptions, contract prices negotiated in advance, special costs for partners, and/or other conditions deviating from the standard.

With a CPQ system, companies can ultimately ensure that their price and quote design for customers always runs smoothly and correctly.

How do CPQ softwares work?

A Configure-Price-Quote software normally works exactly corresponding to the CPQ meaning or the process sequence given its name: starting with the product configuration (Configure), over the price determination (Price) up to the creation of a quote document (Quote).

1. The composition of the products is the first step: Depending on the software, a guided needs analysis, cross and up-selling suggestions, completeness and plausibility checks, tests for rule violations, and other aids can be used here.

2. The pricing follows in the second step: Here, special prices, bundle prices, quantity prices, and other more specific configurations are usually possible. Some solutions offer approval workflows.

3. The creation of the quote takes place in the end: Depending on the software, an individual layout can be generated here. Multiple versions or even multilingual offers are also possible. In addition, a function for digital signatures is often integrated or can be integrated.

In CPQs, artificial intelligence (AI) can be used at several points within these processes. As a result, such solutions are able to make increasingly better product and pricing suggestions over time. Ideally, this means a reduction in their workload for users.

What are the advantages and disadvantages of CPQ software?

A CPQ software offers the following advantages in particular:

• Simplifying the securing of the quote process: Many companies have to deal with extremely complex quote creation processes due to a variety of products, different contract types, and various business rules. CPQ software makes things easier here. Users can ideally create a perfectly fitting quote that automatically adheres to all preset parameters within minutes. Furthermore, such a tool can effectively prevent errors.

• Reduce time for quote creation: A CPQ software stores prices and other important sales data. This allows sales staff to create consistently accurate quotes with the help of a clear database. As all sales data is stored in one central location, the need to consider "stacks" of Excel spreadsheets and other multi-layered calculation processes is eliminated. The salespeople finally have more time for direct selling to customers or strategic to-dos.

• Optimize the approval processes: The approval processes in sales can be tedious and disorganized. A CPQ software can automate important tasks with release workflows. This means that created quotes automatically go to all employees involved in the approval process. Once certain quotes have been approved by the people involved, they can also be automatically sent to the relevant customers. CPQs also allow those responsible to configure the approval process as required. If, for example, sales staff create generic quotes without special prices or details, these can be sent directly to customers. It is also sometimes possible to configure the software in such a way that an approval process is initiated only when a certain discount should take effect.

• Increase average business volume: In the last phase of the sales cycle, buyers are often particularly open to additional offers. This is where cross and up-selling comes into play. CPQ software can automate the process of identifying additional offers by making recommendations based on order history. In addition, the seamless processes that can be achieved with a CPQ tool can contribute to faster sales, better payment processes, and optimized subscription renewals.

• Gain useful insights on sales: Through the data, which is available in a centralized location within the CPQ software, sales teams can gain valuable insights into what works and what doesn't. With this information, it is possible to determine, for example, how often products successfully discount and how long a sales approval takes. Users can also search through prior sales transactions, which can be useful for copying, revising, and clarifying orders. CPQ systems also offer real-time analytics, providing users with a current overview of market trends and other insights. The information can be helpful in closing deals faster and more accurately.

• Increase the effectiveness of the sales team: Sales staff spend only about a third of their time selling and interacting with (potential) customers. The rest of the time is spent filling out product or price tables, creating quotes, and performing various other administrative tasks. Implementing a CPQ tool can significantly reduce the effort for such to-dos. Through automation, sales staff can work more efficiently, use more time for the important task in sales, and ultimately work more effectively with customers.

CPQ software does not really offer any disadvantages. However, its use can indeed bring about a number of challenges. The difficulties listed below are central:

• Inaccurate quotes due to the use of incorrect data: A common problem with the use of CPQ systems is the creation of quotes that miss their target. This is usually not due to the software itself, but is based on the import of outdated or unsuitable data. Therefore, companies must always carefully select the information that the tool should import (automatically). A final check is a must in any case.

• Difficult initial phase: For sales departments that have manually created their quotes up to now, the switch to an automated tool can be associated with significant start-up difficulties. Since the introduction of CPQ software turns the conventional way of creating quotes upside down, existing protocols must be appropriately revised. The sales staff also have to be motivated to accept significant changes to their workflows.

How to choose the right CPQ tool or what should one pay special attention to?

The acquisition of a CPQ software always involves substantial costs. Furthermore, not every tool fits every company context. Responsibility for these two facts alone must be carefully considered by those in charge, which product they choose best for their operation. The following points should always be taken into account with regard to this.

• Capture the real benefit: Not every business necessarily needs a CPQ tool. Central clues that such a solution is appropriate for your own company are obviously inefficient quote processes, complex product configurations, and/or regular experiences with inaccurate quotes or rework. Furthermore, difficulties with discounts and/or releases, missed cross- and up-selling opportunities, or slow response times to quote inquiries may be indicative of the relevance of CPQ software.

• Keep hidden costs in mind: CPQ solutions may have costs that are not immediately apparent. Personal support and subsequent scaling sometimes charge quite a bit. Here, it pays to think long term so that those responsible do not end up choosing a particularly cost-effective solution that will come at a much higher cost later on.

• Focus on easy operation: Ideally, users don't have to go through extensive training to find their way around the chosen CPQ software. If you choose wrong here, you will soon notice that there are difficulties in acceptance. Only a tool that is easy to use will achieve 100 percent acceptance within the entire team and will then also be used to its fullest potential.

• Truly support the quote and sales process: Studies show that CPQ software can significantly contribute to faster sales, better payment processes, and optimized subscription renewals. However, such advantages only arise if the used program really extensively supports the sales team. The solution that those in charge finally decide on should therefore be precisely tailored to the needs of the individual team members and really help them. Accordingly, team members should also always be involved in the choice of a CPQ provider.

• Question the automation of the quote process: "Easy" and "fast" - these terms will always come up when interested parties do their research for the best CPQ software for their team. However, some tools can serve these buzzwords in their work better than others. "Automation" and "AI" are the keywords here. In order to fully support the sales staff, those responsible should look for an agile and highly automated solution - if it is within the budget.

• Suitable solution for own needs: Interested parties should choose a solution that precisely offers what their team needs. In this context, it is advisable to create a list of as many requirements and needed functions as possible.

• Consider growth possibilities: Make sure that the chosen solution can be easily scaled with the growth of your company. When requirements change, you shouldn't have to switch to a new CPQ software right away. This would likely mean a significant implementation and establishment effort again.

• Aim for seamless interaction with other software: The ideal CPQ software can be perfectly combined with other software that sales typically use - especially with CRM. The use of multiple independent software solutions would be very inefficient in various ways. Such an arrangement usually leads to complex processes, a higher error rate, and sometimes significant dangers.

• Take advantage of special analytics: The chosen CPQ solution ideally outputs regular data reports. This enables members of the team to see what works and what doesn't. This information helps to optimize selling in a very purposeful way and increasingly trains the sales staff.

• Don't forget about support: Is there a support number you can call if there is a problem with the CPQ software? Or even better, is there a chance to contact special customer advisors who know the specific company requirements exactly? Such or similar good support conditions should not be underestimated! For even with programs that are completely established within companies, difficulties can arise again and again for which a direct point of contact is needed.

• The big ones are not always the best: The comparison and juxtaposition of various solutions, taking into account all the points mentioned above, can be a long process. Overburdened sales leaders are quickly tempted to throw all caution to the wind and simply choose the CPQ solution with the most famous name. Unfortunately, popularity is a bad indicator of a perfect fit. The most popular solution is by no means always the best or most suitable one. Therefore, enough time should definitely be planned for extensive research.

What do CPQ tools cost? Most modern CPQs are cloud systems. They are usually billed as a monthly subscription based on the size of the company or the needed scope of functions and the number of users. The central advantages of cloud CPQs are as follows:

• Easy deployment as the software is accessed online and not on your own local servers.

• A shorter implementation time - for the same reason.

• Automatic maintenance by the provider instead of users organizing the corresponding to-dos.

Some CPQ software vendors also offer solutions that are hosted on-site and whose price is sometimes quoted as a perpetual license. However, there are usually fees for support and maintenance with perpetual licenses.

The prices for good CPQ tools start at around 50 euros per month and user. Depending on the number of features, they can rise to up to 250 euros monthly and higher. Many providers do not specify prices on their website - at least not for enterprise solutions. Here, an individual offer is calculated on request.

An open-source CPQ software can even be used for free. However, such CPQ freeware may not offer as many functions and integrations as the paid alternatives do. Certain open-source products also require programming language skills - for example, JavaScript.