CPQ Software

Software Tips

What is CPQ?

CPQ is an abbreviation that stands for Configure, Price, Quote. Configure, pricing or price calculation and quote generation are the corresponding German terms behind CPQ.

The CPQ process

Brief introduction to CPQ software

CPQ software is a sales tool. The system usually helps companies to offer customized products and services with the help of a product configurator and to create precise quotations for these specifically designed products and services.

Configure

The product configurator is the heart of the CPQ software. Products with many variants or particularly variable services can be put together easily and individually by the customer using the CPQ software.

Important software components in the Configure area include guided selling, i.e. a guided needs analysis, plausibility checks, the display of "rule violations" and, for example, 3D visualization, cross-selling and upselling and a web store or dealer portal. In the Configure area, there are also more and more options for configuring products with sustainability aspects in mind.

Price

Once the configuration has been completed, the next step in the process is to calculate the price of the combined services or products. As a rule, the software displays a detailed parts list of the configured product or a corresponding list of the individual service items. The total price is then calculated on the basis of these individual items.

The calculation usually also includes individual special conditions, which can be taken into account using an integrated discount function. An approval or release workflow is often also triggered.

Quote

Once the price calculation is complete, the software summarizes all the information. The product or service configuration, photos, 3D visualizations, descriptions of the individual items, etc. are linked and transferred into a corresponding quote. As a rule, a corresponding corporate design can be stored for the quotations. The CPQ software often offers the option of creating quotations in several languages. In most cases, it is also possible to create a quote comparison. Data is usually exchanged with other systems such as ERP, CRM etc. via interfaces. In most cases, the order can be created automatically via interfaces. The integration of CPQ software with ERP and CRM systems optimizes collaboration between sales, marketing and production.

Application areas for CPQ software

CPQ software can be used in different ways and in different industries. In general, when using such software, a distinction must be made as to whether the solution is only to be used internally as a supporting tool for sales staff or whether it is also designed for customers, i.e. publicly, as a web configurator, online configurator or self-service.

Internal use

Sales staff can use CPQ software to offer complex and diverse products as well as standard products reliably and quickly. A configurator can be used to quickly and reliably put together the right variants of a product or scope of services.

Online configurator and self-service portal

Customers can use an online configurator to get a rough overview of the possible variants of a product and the price range. By using the online configurator, the sales department can usually obtain the contact details of the prospective customer. This enables communication to be initiated with the prospective customer. A detailed configuration and a binding offer can be created by the sales department.

If the CPQ solution is used in the self-service area, prospective customers can carry out the entire purchasing process themselves online. This usually means that they can carry out everything independently, from intuitive and guided product configuration and simultaneous price determination to placing the order and checking out in the online store.

Branches

CPQ software is designed in particular for use in companies with products or services with many variants. These include companies in the automotive sector, plant and mechanical engineering, manufacturers of components, devices and appliances as well as suppliers of construction products, medical technology or the furniture industry. Companies in these sectors generally offer products that can be specially combined from various individual components. Well-known examples include vehicle or kitchen configurators and configurators for bicycles.

Services in the creative sector (advertising, graphic design, print) or in the event sector can also often be designed in a wide variety of ways. Here too, different components are often combined to create a complete service. Examples in the print sector include configurators for invitation cards, photo gifts with your own photos, etc.

Tips for selecting CPQ software or CPQ tools

• Which existing systems does the CPQ software need to link and how is the data synchronized? Seamless integration into existing CRM, CAD, ERP and PIM solutions is essential to ensure data consistency and efficient processes. It is therefore particularly important that interfaces to these systems are available. When selecting a CPQ solution, also make sure that the provider has sufficient experience in implementation!
• The CPQ software should be flexible and scalable. The program must be able to map the complex sales structures and calculation processes of your company and should also be able to grow in line with your business growth. The CPQ software should remain performant even with an increasing number of users or product complexity.
• Check the functional scope of the solution. When making your selection, check whether the CPQ solution includes, for example, country-specific print formats, tabular quote comparisons, offline configuration options and options for intercompany pricing and subscription. Ask the CPQ solution provider about the functions for automating routine tasks. These can significantly reduce quote-to-cash time.
• Is the CPQ solution already tailored to your industry? Providers often focus on specific industries or a certain level of complexity and adapt their software accordingly. In this context, it is important to check the extent to which the software has ETO (Engineering-to-Order) and CTO (Configure-to-Order) functionalities that map your needs.
• Do you want to offer your customers an optimal product selection experience? For an intuitive and user-friendly product selection, guided selling can be an advantage. Does the CPQ software include such guided selling?
• How is the CPQ software's set of rules structured? For example, do you check whether the calculation basis (price lists, manufacturing costs) can be freely selected? Can changes be incorporated into the software independently?
• Can the CPQ software display reasons for a configuration that is not permitted? Both sales staff and customers can then understand more quickly and easily why a particular selection is not possible.
• An intuitive user interface enables sales staff to create and manage offers quickly and efficiently. Employees should be able to use the software without a long training period. A high level of acceptance is important so that the software is used to its full extent.
• Reliable customer service and comprehensive training resources are crucial for the successful implementation and use of the software. During the ongoing operation of a software, it is also advantageous to have a specific contact person at the software manufacturer who knows the specifications in detail and can provide competent information and assistance.
• It is important that complex products can be configured intuitively. Therefore, if possible, test the functionality and performance of the platform in a proof of concept. If you already have existing configurations for products or services, request a live demo that takes your individual configurations into account.