What is CPQ?
CPQ or Configure, Price, Quote is a process MSP sales and operations teams use to create quotes for IT products and services.
CPQ helps sales teams quickly configure products based on their customers' needs and specifications, calculate margins and profitability, and generate accurate quotes.
Configure
The configuration stage involves determining the specific product SKUs that a customer requires and configuring those products to meet their unique needs.
Quoting software is typically tied to the distributors you work with to provide real-time cost, location, and availability information that will be used when selecting your items.
During this stage, certain CPQ systems can also identify opportunities to create a more customized solution for your customer. Through smart cross-selling and upselling suggestions, you can add even more value while potentially increasing your profitability. It's a win-win for everyone involved.
The major challenge with CPQ software is actually building and calculating your solution. How do you know which items to select? How many of each item do you need?
The answers to these questions involve either a very long discovery process (typically days if not weeks) or worse risking getting it wrong by cutting corners and guessing.
BOM automation solves this problem in minutes. Using answers you provide during a guided selling workflow, up to 26 different calculations instantly build and calculate your bill of materials. From there, you can make any additional customizations you need, we call it BC-CPQ (Build, Calculate, Configure, Price, Quote).
If you want to learn more about BOM automation, book a demo and we’ll be happy to show you.
Price
The main part of this process is getting the actual costs and applying the appropriate margins to align with your revenue goals.
Once you’re finished configuring, the system will calculate a price based on the chosen components or options, as well as any other relevant factors such as quantity discounts, promotions, and taxes.
Again, in some systems there are approvals built in to handle any pricing that goes outside of your normal parameters.
This further helps keep your sales team out of trouble by allowing a manager or specialist to make sure the pricing is within the guidelines of the business.
For example, if you already upgraded your pipe from the ISP but you need everything else, then you will receive a subscription for everything minus internet services.
Or if you just refreshed your access points and switching but you still need firewalls then you would purchase a subscription that includes firewalls.
NaaS gives you the flexibility to build a subscription that provides the most value for your business.
Quote
The final stage is where you will present your proposed solution to the customer, showcasing the configured products or services, and the total cost.
Quoting software helps here as well by automating all of the configuration, pricing, and customer data into the final quote. Again, this helps you be more productive, and more importantly error-free—you didn’t come this far just to flub the customer’s name on the proposal.
Most systems provide some level of customization with regards to creating the quote to the customer. From branding to standardized messaging, template builders etc., you’ll have control over how you present the solution to the customer.
Once finalized, the quote is then shared with the customer for review and approval. This can happen using electronic signature I.e. DocuSign, or through more legacy motions using PDFs and email.
What is CPQ Software
CPQ (Configure, Price, Quote) software is a type of business software designed to help sales teams automate and streamline the process of producing accurate and customized quotes for the products and services they offer.
In general, CPQ software or quoting software, as it's also referred to, accelerates your sales cycle and increases your profitability with more efficient and error-free decision making.
This type of software system is a critical tool for IT businesses such as MSPs, system integrators, and VARs due to the complexity and customization of the solutions they deliver to their customers.
By using quoting software, your MSP business can increase its productivity, reduce the number of inaccurate or unprofitable quotes, and provide a more enjoyable buying experience for your customers.
CPQ software plays a major role in creating digitally connected Sales Operations by empowering sales teams and fostering collaboration throughout the quoting process.
The best way to explain how it all works is by taking a look at each step of the quoting process.
What is guided selling?
Guided selling is a key feature of CPQ systems that can help sales reps improve their efficiency and accuracy. Guided selling provides a step-by-step interface that helps sales reps navigate the required inputs for the CPQ process.
By reducing human error, guided selling ensures that quotes are accurate and reflect the unique requirements of each customer.
Guided selling also increases speed by keeping sales reps focused on the task at hand, rather than jumping from one task to another.
This can help sales teams generate quotes more quickly and efficiently, improving the overall sales process.
Guided selling enables sales teams to scale their operations by creating predictable, repeatable outcomes.
By following the same steps for each quote, sales reps can ensure that each quote is consistent and accurate, regardless of who is generating it. This can help sales teams increase productivity and generate more revenue over time.
Benefits of CPQ Software
With CPQ software, you can expect smoother sales collaboration, fewer mistakes, and happier customers. Quoting software helps increase revenue and improve sales forecasting, so you can make informed decisions and plan for growth.
CPQ software can help you streamline operations, boost your profits, and set your business up for long-term success.
Boost sales collaboration
CPQ software can help your teams work together better by providing a shared platform that streamlines the sales process and gives everyone greater visibility into what's going on. All of this means that sales teams can work more efficiently and respond faster to customer requests.
Generate quotes faster
With quoting software, you can quickly configure products and services, generate accurate pricing, and produce professional-looking quotes in a matter of hours.
As a previous MSP, we used to spend up to 4 weeks manually producing quotes for network refresh projects using complex pricing spreadsheets, but our CPQ system helped us cut that time down significantly.
Ensure accuracy
Nobody's perfect, so why rely on manual data entry when generating quotes and proposals? CPQ software eliminates the potential for human error, ensuring that your sales reps provide accurate quotes and proposals every time. Automation makes the sales process faster and more efficient, freeing up your sales teams to focus on selling and closing deals.
Enhance the customer experience
Customers expect fast and accurate service, and CPQ software helps you deliver just that. Sales reps can quickly generate quotes and provide product and pricing information, building trust and confidence with customers. By streamlining the sales process, CPQ software helps create a seamless customer experience, leading to stronger relationships and increased loyalty.
Increase revenue
By streamlining the sales process and reducing administrative tasks, sales reps can spend more time selling. Quoting software can help identify up-sell and cross-sell opportunities by providing a complete view of a customer's purchasing history, leading to higher sales and improved margins.
Optimize sales forecasting
How can you predict future sales if you don't have a complete view of your customer interactions and sales activities? CPQ software captures all of this information in one central location, giving you accurate and up-to-date sales forecasting data. With this information, you can make better decisions and plan for future growth.
CRM with CPQ integration
CRM (Customer Relationship Management) software is something that businesses use to keep track of their interactions with customers. It's like a digital Rolodex that helps you keep track of all the details about your customers, like their contact information, purchase history, and any interactions you've had with them.
When you combine your CRM software with a CPQ tool, you can really streamline your sales process. CPQ tools help you create accurate quotes based on the customer's specific needs and preferences.
By integrating CRM and CPQ, you can ensure that customer data is synced across both systems. This means that if you make any updates in the CRM system, like adding a new contact or updating an existing one, those changes will be automatically reflected in the CPQ tool. And vice versa, if you generate a new quote using the CPQ tool, that information will be updated in the CRM system as well.
This integration is super important because it helps you avoid errors and saves time. You can spend less time entering data manually and more time focusing on building relationships with your customers. Plus, by automatically updating pipeline and deal information, you can make better decisions based on real-time data.
Types of CPQ software for MSPs
CPQ software solutions come in two main varieties: horizontal and vertical. Choosing the right quoting software for your MSP business is crucial, as investing in the wrong tool can be a costly and time-consuming mistake to rectify.
It's important to carefully consider your options and select the software that best fits your specific needs.
Horizontal CPQ solutions
Horizontal CPQ tools are designed to be used across multiple industries with minimal customization. These systems typically focus on standardizing the sales process, streamlining order creation, and increasing accuracy of orders.
Examples of horizontal CPQ software solutions include Salesforce CPQ and Oracle CPQ, and DealHub.
Vertical CPQ solutions
Vertical quoting tools are built to meet the specific needs of an industry and are highly customizable. This type of CPQ software offers features and functions tailored to a particular industry, like quoting complex products or services, managing customer-specific pricing rules, and tracking custom configurations.
Examples of vertical CPQ software solutions include ConnectWise, QuoteWerks, and of course us here at TechGrid.
How do I know if I need CPQ Software?
CPQ software could be the key to streamlining your operations and boosting your bottom line. But how do you know it’s time to invest in a quoting tool? Here are some key questions to ask yourself:
- Do the products or services that I offer require complex configuration?
- Are my sales reps spending a lot of time creating quotes and proposals manually?
- Do I often encounter errors or inconsistencies in my quotes or proposals due to human error?
If you answered "yes" to any of these questions, then quoting software is probably worth considering. Quoting software can help automate the quoting process, save time, minimize errors, generate precise quotes and proposals, and satisfy customers leading to more sales.
How much does CPQ software cost?
CPQ tools costs vary based on features, business size, and vendor. Let's break down the factors that influence CPQ costs and help you estimate what you might invest.
Cost Considerations:
- Features: The more bells and whistles (advanced product configuration, robust reporting, etc.) the higher the price tag. Identify the features essential for your business and prioritize accordingly.
- Pricing Structure: Larger companies with more users will typically pay more than smaller businesses. Many vendors offer tiered pricing based on user count. Different vendors have varying pricing structures. Compare quotes from several providers to find the best fit for your budget and needs.
The best way to determine the specific cost of CPQ software for your business is to contact vendors directly and request quotes. Be clear about your needs, desired features, and user count.
CPQ integration with ERP
A seamless flow of information between your CPQ software and your Enterprise Resource Planning (ERP) system is crucial for efficient order processing and accurate inventory management.
Most CPQ tools offer integration capabilities with popular ERP systems. Here's how to ensure they play nicely together before you invest:
- Vendor Resources: Check your CPQ vendor's website or documentation for a list of supported ERP integrations.
- Direct Inquiry: Contact your CPQ vendor directly to verify compatibility with your specific ERP software.
- Level of Integration: Even if your CPQ and ERP systems are compatible, the level of integration may vary.
- What data will be exchanged between the systems (e.g., customer information, product configurations, pricing)?
- Can you automate tasks like order creation or inventory updates based on CPQ data?
- Will additional customization be required to achieve your desired level of integration?
Best CPQ software for MSPs
These are the best CPQ software for MSPs - the eight best “vertical” solutions we believe provide IT organizations with the tools they need for successful quoting.
QuoteWerks
A long-standing CPQ solution, QuoteWerks that streamlines the quoting process, extends your brand, and enables your team to close sales cycles quickly with e-signatures, follow-up reminders, and payment acceptance.
ConnectWise CPQ
Trusted by over 40,000 MSPs, ConnectWise CPQ simplifies the process of building complex quotes and proposals by utilizing custom templates, automated sourcing, and seamless PSA integration.
Quoter
Quoter is an intuitive quoting tool that allows for quick creation of quotes, with features such as client engagement tracking and easy template creation and updating.
VARStreet
VARStreet is a comprehensive sales platform designed for technology solution providers, offering CPQ, eCommerce, and CRM functionalities in one place.
VAR Commerce
VARCommerce streamlines VAR businesses with a single-entry approach. This includes creating customized e-commerce storefronts to attract new customers and bundling services with products for efficient sales processing.
Salesforce CPQ
Salesforce CPQ streamlines the IT quoting process with automation and guided selling. It offers features like product bundles, flexible pricing, and advanced approvals to reduce errors, accelerate sales, and cater to diverse customer needs.
Datto
Datto Commerce is a procurement and quoting platform that operates in the cloud, designed to elevate both profitability and efficiency for MSPs.
TechGrid
TechGrid is a business automation platform designed exclusively for managed service providers (MSPs) to enable them to build, sell, and fulfill IT solutions.
It’s digital transformation for the MSP.
TechGrid automates estimated sales tax calculations within your quote workflow. Get estimated taxes for your business footprint and automated calculations directly within the CPQ engine.
The TechGrid platform is unlike anything else on this list or in the industry and offers much more than just quoting. In fact, our CPQ capabilities surpass anything available in the market, making us a unique and unparalleled alternative.
