CPQ (Configure, Price, and Quote): What It Is and How It Works
CPQ (Configure, Price, and Quote) is an enterprise software solution that helps businesses automate and optimize the process of configuring, pricing, and generating quotes for complex products and services.
In a market where speed and accuracy in sales make all the difference, many companies still rely on manual processes to configure products, calculate prices, and generate quotes. This slows down negotiations and increases the risk of errors that can cost time, money, and customers.
This is where CPQ comes into play—a solution designed to streamline and enhance every stage of the sales process. By automating product configuration, standardizing price management, and generating precise quotes in just minutes, CPQ helps businesses reduce errors, increase efficiency, and improve the customer experience.
CPQ can transform the way your sales team operates by eliminating bottlenecks, accelerating decision-making, and maximizing profitability. If you’ve ever faced delays in quote approvals or inconsistencies in pricing, keep reading to discover how this technology can be a game-changer for your business.
What Is CPQ?
CPQ (Configure, Price, and Quote) is enterprise software that helps businesses automate and optimize the process of configuring, pricing, and generating quotes for complex products and services.
Implementing CPQ in a company streamlines sales processes, reduces errors, enhances the customer experience, and allows operations to scale more efficiently. It is a key tool for companies looking to increase competitiveness and speed up business transactions.
Key Components of CPQ:
Configure: Enables sales teams or customers to customize products and services according to their needs, ensuring that only viable combinations are selected.
Price: Applies pricing rules based on discounts, promotions, purchase volumes, and profit margins to calculate the final cost.
Quote: Generates accurate and professional quotes quickly, reducing errors and response times.
Companies with complex product or service catalogs—such as those in manufacturing, technology, and telecommunications—tend to benefit the most from CPQ solutions.
Advantages of Using CPQ
Implementing a CPQ system offers multiple benefits for businesses, especially those with complex sales processes. Some of its key advantages include:
Faster Sales Process: Automates configuration, pricing, and quote generation, reducing the time needed to close deals.
Fewer Quoting Errors: Applies business rules and automatic validations, preventing mistakes in product configuration and price calculations.
Optimized Pricing and Margins: Adjusts prices based on discounts, purchase volume, promotions, and business strategies to maximize profitability.
Enhanced Buying Experience: Customers receive quick responses and accurate quotes, improving satisfaction and trust in the company.
Increased Sales Team Efficiency: Sales representatives can focus on closing deals instead of spending time on manual calculations and revisions.
Integration with CRM and ERP Systems: Syncs with management platforms like Salesforce, SAP, or Microsoft Dynamics, ensuring updated and consistent data across the company.
Greater Scalability and Customization: Ideal for businesses with configurable products or services, allowing personalized quotes with ease.
CPQ helps businesses close more deals in less time, with accurate pricing and a superior buying experience.
How CPQ Works
CPQ functions as a system that automates and optimizes the sale of customized products and services. Its workflow is divided into three key stages:
Configuration. Selecting and Customizing Products or Services: - Rules are established to prevent invalid combinations. - Users can choose product features, add-ons, or variations. - The configuration of complex products is automated (e.g., software with different modules or industrial equipment with specific components).
Pricing. Calculating the Final Price Based on Business Rules and Strategies: - Discounts, promotions, or volume-based pricing are applied. - Taxes, production costs, and profit margins are factored in. - Artificial intelligence can be integrated to suggest optimal pricing based on demand and competition.
Quoting. Generating a Clear, Detailed, and Professional Sales Proposal: - A document is created with selected products, pricing, conditions, and sales terms. - The quote can be customized with the company's branding. - In some systems, customers can digitally approve the quote and proceed with the purchase.
CPQ can integrate with various business systems to ensure seamless operations:
CRM: To manage customers and sales opportunities.
ERP: To synchronize inventory, purchase orders, and invoicing.
eCommerce: To allow customers to configure products online.
How to Choose a CPQ Solution
When selecting a CPQ solution, it is important to consider several factors to ensure it meets your company's needs and optimizes the sales process.
Ease of Use and User Experience: An intuitive interface that allows sales teams to use the software without extensive training.
Product Configuration Capabilities: Compatibility with both simple and complex products, along with rules and restrictions to prevent invalid configurations.
Pricing Management Flexibility: Support for multiple pricing strategies, such as volume discounts, promotions, or customized margins.
Quote Generation and Automation: Ability to create clear, customized sales proposals with corporate branding, as well as automate approvals and digital signatures.
Integration with Other Systems: CRM to synchronize customer information, ERP to manage inventory and invoicing, eCommerce to enable customer self-service.
Scalability and Customization:
The ability to adapt as the business grows, with customization options for different industries and business models.
Analytics and Reporting:
Tools for generating reports on quotes, profit margins, and sales team efficiency.
Security and Regulatory Compliance:
Protection of sensitive customer data and transaction security.
Before selecting a CPQ solution, test a demo and verify its compatibility with your current processes. The right choice can transform your sales process and accelerate business growth.
CPQ Software Solutions
There are various CPQ solutions available in the market, each with specific features tailored to different industries and business needs. Here are some of the top CPQ software options:
Salesforce CPQ: Seamlessly integrates with the Salesforce CRM ecosystem. It is ideal for businesses managing subscription-based pricing models and needing to automate quotes, discounts, and contracts efficiently.
SAP CPQ: Designed for companies already using SAP ERP and CRM. It focuses on managing highly configurable products with advanced pricing rules and complex quoting, making it an ideal solution for manufacturing and the automotive sector.
Oracle CPQ: Known for its robustness in handling large-scale sales operations. It integrates with Oracle ERP and other platforms, offering dynamic pricing and automated approvals, making it ideal for businesses with multi-level sales structures.
Configure One (Revalize): One of the best options for creating real-time 3D product configurations and managing complex production processes.
PROS Smart CPQ: Stands out for its use of artificial intelligence to optimize pricing strategies and improve sales conversion. It is highly useful in the software, eCommerce, and financial services sectors.
IBM Sterling CPQ: Another solid option, particularly for managing advanced product and service configurations. Its ability to automate sales processes makes it attractive to industries such as technology, telecommunications, and retail.
PandaDoc CPQ: A lighter solution focused on document and quote automation, with tools for managing approvals and electronic signatures. It is ideal for small and medium-sized businesses looking for speed in generating commercial proposals.
The best CPQ software for your business will depend on factors such as industry, company size, and existing systems. Companies already using Salesforce, SAP, or Oracle can benefit from their native CPQ solutions, while those looking for flexible pricing and automation may prefer options like PROS Smart CPQ or PandaDoc.
Companies That Use CPQ
Many companies across various industries use CPQ to streamline their sales processes, especially those dealing with complex products and services. Some of the most notable examples include:
Manufacturing Industry: Uses CPQ to configure products with multiple options and ensure accurate quotes. Examples: General Electric, Siemens, Caterpillar.
Technology & Software: CPQ enables personalized offerings and helps manage subscription- or license-based pricing models. Examples: Dell, HP, Oracle, Salesforce, Microsoft.
Telecommunications: Uses CPQ to bundle different services, apply discounts, and generate contracts automatically. Examples: AT&T, Verizon, Telefónica.
Automotive & Transportation: CPQ ensures viable configurations and generates instant pricing. Examples: Tesla, Ford, BMW.
Healthcare & Medical Equipment: Helps configure medical devices according to hospital needs and regulates pricing based on healthcare policies. Examples: Medtronic, Philips Healthcare, GE Healthcare.
B2B Companies with Complex Sales: CPQ simplifies contract creation and the generation of detailed business proposals. Examples: Schneider Electric, Cisco, IBM.
All these companies use CPQ to reduce errors, speed up quote generation, and enhance the customer experience.
Why Use a CPQ System in Your Business?
Implementing a CPQ system can significantly transform the sales process, especially for businesses dealing with complex products or services. This type of software automates and optimizes product configuration, pricing calculations, and quote generation, resulting in greater efficiency, accuracy, and speed in commercial transactions.
One of the main benefits of CPQ is the reduction of quoting errors. By automating the process and applying predefined rules, it eliminates inconsistencies in pricing and configurations, preventing customer issues and financial losses. Additionally, it allows for more competitive pricing by incorporating dynamic discounts and personalized strategies based on purchase volumes, profit margins, and promotions.
Another key advantage is the improved customer experience. With CPQ, quotes can be generated in minutes instead of days, accelerating sales cycles and increasing buyer satisfaction. Some CPQ solutions even include visual configurators, allowing customers to personalize products intuitively, which simplifies decision-making and reduces friction in the buying process.
For sales teams, CPQ means greater productivity. Instead of spending time on manual calculations and internal validations, they can focus on closing more deals. Plus, integration with CRM and ERP systems ensures access to up-to-date information on inventory, pricing, and customers, enabling informed decisions and more effective sales strategies.
Using CPQ also supports business scalability. As a company grows, managing quotes manually becomes unsustainable. CPQ helps standardize processes, reduce reliance on internal approvals, and ensure all proposals align with company policies.
