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In a recent poll, 83 percent of companies surveyed were using CPQ apps to improve their business. Whether you were in that other 17 percent or—like the rest of us—weren’t polled at all, that number should raise an eyebrow. Why are so many professionals from a single testing pool investing in CPQ? And how can you get started in doing the same?

Configure-Price-Quote—or CPQ—is one-half of the quote-to-cash giant, coming before billing. Here are some of the elements that comprise CPQ.



Configuration, the big C in CPQ, is naturally the first step. This is the process of understanding and packaging your product and service options in order to sell them together. You will need to take stock of all everything involved in getting your product into customers’ hands.

  • Identify your exclusions. Do you have products or services that are not compatible with one another? Can some products or services not be sold in specific regions due to company policies or domestic/international regulations?


  • Identify your dependencies. What are the products or services that are required before another product or service is quoted? Or do you have more complex use cases, such as prior purchase or quantity-based constraints—or perhaps complex business logic tied to the contextual information of the quote?


  • Automation. Do you want to offer “guided configuration” to your sales reps, so that by answering some key questions, part or all of the configuration is automatically taken care of by the system? Think about taking advantage of such automation to significantly reduce the time it takes to configure your products and services.

As you go about configuration, you will need to think of your sales representatives. Your job is to guarantee that your sales representatives always quote a solution that is technically and commercially viable to their end clients, and that they do so as quickly as possible, without errors.



Once configuration is done and you know all of the variables involved, it is time to price. This will be easier once you know everything you’ve had to pay to get your product or service off the ground. Manufacturing costs, economic conditions, and competitor prices are just a few things to take into consideration

The key is to automate and standardize the pricing model as much as possible. A CPQ system should be able to automatically apply common things like volume or term-based discounts and client-specific pricing. Regardless of which direction you go, think carefully about whether you are making it easy for your own clients to do business with you. I have seen companies go with a complex pricing model that made total sense on paper but could not be understood by their customers or even their own sales reps. Avoid the risk of losing business because your clients don’t understand what they will have to pay and why.



Quoting, the big Q, is even easier than configuration and pricing. Let’s break it down into steps.

  • Approval. First, you need to get your quote approved internally. The same major concepts apply here as for configuration and pricing. Ideally, your approval processes should be uniform across the entire company. For example, having different discount approval structures according to region, product family, or client markets will only make things more complicated—not only for your CPQ administrator, but also for your quoting users. The more you standardize, though, the better shape you’re in to implement and automate the approval process.


  • Document Generation. Of course, internal approval is nothing without client approval—you have to get the quote to the client.
    • The quote document itself will require automated templates. The document-generation engine should obviously allow you to fully control the layout and the look and feel of the generated document. But it goes beyond just formatting. Business transactions are complex, and you need flexibility when presenting a quote to a client. Generating documents can require complex logic such as dynamic grouping or sorting of products and services, the possibility to automatically show or hide information based on contextual data, or generate a dynamic set of terms & conditions that match the products and services quoted to each specific client.
    • Your CPQ system should be customizable to account for localization concerns such as language and special symbols. For example, do you need not only your static text in multiple languages, but also your product names and descriptions, among other things?


  • Client Acceptance. As soon as you send the quote output to the client, the negotiation process starts. We can introduce the possibility to use a CLM (Contract Lifecycle Management) system which is not part of CPQ or Billing, but is offered by 3rd party companies such as Conga Contracts or SpringCM to facilitate and automate the redlining process. Once negotiations are closed, we have client acceptance.
    • Every document should be made to allow for electronic signature, which gives you the ability to track metadata about the signature process and to trigger automatically multiple additional business processes: for example, you could automatically close/win the opportunity upon e-signature, or trigger your contracting and/or fulfillment process, and so on.


  • Amendments and Renewals. The fulfillment process begins at client acceptance. This includes the “contracting process”, or creating a record of the products and services purchased by the client, in preparation of future amendment and renewal transactions.
    • Having such records is important when you provide support or maintenance along with your products and services. Support agents need access to reliable information to make sure that clients are entitled to receive such support when they contact you.
    • Companies having a subscription-based business model will face additional types of transactions in the form of amendments and renewals. An amendment is a transaction that modifies the products or services purchased before the end date of the contract. A renewal represents the products and services that will hopefully be purchased again once the contract expires. Of course, both types of transactions offer the often lucrative opportunity for upsells!
    • Advanced CPQ systems fully automate the creation and handling of the transactional aspects of a contract through its lifecycle.


Next Steps

Once the client has received and accepted the quote, your QTC solution still has work to do. Here are the five main tasks that remain:

  1. Record bookings. Remember that no sale is complete and no revenue is made until it has been booked, thus sealing the transaction.
  2. Invoicing. The software will need to take the detailed information from the quote (e.g., products to be invoiced, amounts, frequency of invoicing, etc.).
  3. Dunning. That’s right; a QTC system should be able to help with the second half of the quote-to-cash process. The software should be sending customers reminders that payment is coming due or is past due. It will still be your decision how early you want to remind your clients.
  4. Collections. Collect and record payments from your clients in a timely and automated fashion.
  5. Revenue recognition. With the rise of the SaaS model, revenue recognition has become more complicated and now requires more complex calculations to be done correctly since it’s often controlled by regulations.


Putting it All Together

Every area of the CPQ process can benefit from automation. When you combine the power of automation with a robust and unified set of business processes, the return on investment in a CPQ solution comes to life. The immediate outcome is significantly increased productivity for your sales team, allowing your sales reps to focus on selling, instead of administrative tasks.

In addition to increased productivity, CPQ also has many other positive side effects:

  • It’s a natural complement of your CRM system as it contributes to providing a 360 degree view of your customers.
  • It significantly reduces or completely eliminates errors.
  • It brings visibility and transparency to your customer data: you know how your products and services are discounted and at what level, you can optimize margins, you control the process with automated approvals, and so on.
  • It provides the tools to optimize all aspects of your sales process.
  • It feeds many downstream processes such as fulfillment or invoicing, thereby offering the possibility for further automation throughout the company.


It’s time to catch up with your competitors and adopt a CPQ system. Simplus offers easy-to-understand processes to getting set up with your own system. If you’d like to learn more or simply want to find out whether CPQ is right for you, contact us today.


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