Your sales team must have access to accurate pricing information.
It’s a challenge to manage pricing exceptions in an extensive product catalog. For example, a customer may need to remove the price of certain products for specific situations.
CPQ Pricing Models
CPQ pricing models are the foundation of your sales process and help to ensure quotes reflect your company’s value proposition. Using a CPQ solution, you can easily categorize products into tiers based on their functionality, product features, and more. This enables your sales team to create customized proposals that best meet the needs of each customer.
Whether you want to offer dynamic pricing based on demand or rate-based pricing (commonly used for service-based deals), your CPQ system can automate the calculations and generate accurate, professional quotes in seconds. This helps reduce the quoting process from days or weeks to minutes and hours while maintaining a standardized, professional company message. In addition, CPQ can also help manage promotions and discounts.
Whether your goal is to increase customer loyalty and revenue or decrease churn rates and attrition, practical and strategic pricing strategies are critical to success. By implementing a configurable pricing and quote management software solution, your organization can maximize profit while keeping your sales team happy and productive.
CPQ Pricing Rules
As products and services become more complex, organizations must set pricing rules – and sometimes algorithms – to make it easy for salespeople to create accurate quotes. These pricing rules can include product costs, competitor prices, profit margins, and customer segments. They can also include conditions that trigger specific pricing adjustments.
A CPQ solution provides real-time price guidance to salespeople as they configure products and services, helping them to find the best prices and offer them to customers. This helps ensure that the prices quoted are consistent and competitive and that the pricing offered is aligned with your organization’s pricing strategy.
CPQ solutions also help reduce the time sales teams take to create and send a quote to the customer. This is especially important for large and complex sales opportunities where the ability to deliver a quote promptly can be a key differentiator from the competition.
Sales operations can also use CPQ to create high-quality, professional documents that maintain brand identity and are clear and concise for the buyer. This can be particularly helpful in highly regulated industries where quotes may need to be reviewed and approved by multiple parties. In addition, CPQ can automatically select the correct pricing book and utilize advanced options like block prices, volume discounts, and client-specific rates to ensure precise pricing.
CPQ Pricing Automation
Using a CPQ tool incorporating pricing and configuration automation removes two-thirds of sales representatives’ non-selling activities, making them more productive. This boosts productivity and leads to more cross-selling and upselling opportunities, helping organizations maximize their revenue potential.
CPQ software automates product configuration, eliminates error-prone manual processes, and provides accurate quotes. This reduces back-and-forth with customers and sales reps, resulting in quicker sales wins and better customer satisfaction. Moreover, CPQ helps improve pricing transparency, increasing trust and retention rates.
Before implementing a CPQ solution, you must articulate your goals and evaluate various options. Ensure key stakeholders are involved in the selection and implementation process to ensure they’re on board with the new technology. Once the solution is up and running, it’s essential to communicate the benefits of CPQ with your teams and provide comprehensive training. Likewise, it’s essential to carefully plan and execute the migration of data from existing quoting tools to CPQ, ensuring accuracy and avoidance of any costly mistakes.
The final phase of CPQ involves integrating your solutions with your other business systems, such as ERP. This integration allows CPQ to pull real-time product and inventory information from ERP to keep the most up-to-date prices. Likewise, it also ensures that each quote includes all of the relevant terms and conditions and can be easily converted to a contract with eSignature integration.
CPQ Pricing Reports
The CPQ tool generates automated reports that give sales leaders insight into pricing strategies, win-loss performance, relative margin by product or region, and more. This information helps them make informed pricing decisions that drive revenue and profits.
Manufacturers that grow indirect product and service revenue through channel partners need a CPQ solution to help them meet sales compensation requirements to drive short-term growth and keep distributors in business long-term. They need a system that provides real-time guidance on margin potential by the deal, quota management for contract pricing overrides for margins, and more if they want to keep their distribution partners happy.
Unlike traditional quote-building processes that require handoffs between different team members and departments, a CPQ platform streamlines the process. Sales reps can select the products and services that meet the customer’s requirements, and then CPQ automatically calculates the proposed solution’s price, terms, and conditions. The result is a streamlined sales process that enables more sales at scale and a better buying experience for the customer.
To get the most value out of a CPQ tool, it is essential to choose one that is compatible with your other systems. The best solutions will work with your existing CRM, ERP, and other business applications. In addition, consider how sales teams and leadership will interact with the CPQ tool to ensure that it’s intuitive and easy for them to use.
