Your days are jam-packed with tasks related to bringing in revenue for your company. As your company finds its stride and continues growing and scaling, your daily tasks become increasingly complicated, especially as your product line grows in complexity.
If you are manually tracking orders, you can save time, reduce your sales cycle, and increase future sales by implementing a configure price quote (CPQ) solution.
Configure, Price, Quote (CPQ)
Configure, Price, Quote software (CPQ) enables sales teams to generate price quotes for orders quickly and accurately. An effective CPQ solution can help businesses streamline their invoicing and payment processes, and can simplify inventory management.
If you think using a CPQ tool is the same as sending a basic PDF invoice, think again. By using a reliable CPQ tool, you can streamline your sales process and reduce your time spent performing administrative tasks while your company, pipeline, and product offerings continue to grow.
Let’s break down the CPQ process so you can understand how it works.
The CPQ Process
Facing more product options than ever, customers are no longer interested in purchasing one-size-fits-all solutions. Many buyers are looking for custom products that suit their needs. In fact, one in five buyers is willing to pay a 20 percent premium for personalized products.
Through configuration, you can give buyers the custom products they’re looking for. You can work with buyers to ensure your offering has the features and functionality they are looking for through one system that is easy for you to track.
If your company has an extensive product catalog or a variety of different customization options, configuration features within a CPQ tool can help you quickly and easily create an offer for the product your prospect wants.
For example, if your company sells custom athletic gear and you are selling team wear to a local sports team, you can use configuration software to capture the correct customization of their order including details such as color and fabric.
Once you have configured the offering to the buyer’s liking, price functionality allows you to optimize the price to give to the customer by taking into account the nuances of their purchase, and any applicable discounts or taxes.
Depending on your company’s pricing strategy, the price functionality of a CPQ tool can support your ability to make the sale by modeling the correct price for each deal. Common pricing strategies include:
- Competition-based pricing — Basing the price off of market rate for your offering.
- Cost-plus pricing — Marking up the final price of your product to include the cost of producing your product plus how much your company intends to profit.
- Dynamic pricing — Fluctuating the price depending on customer demand.
- Rate-based pricing — Commonly used for service-based deals. The customer is charged an hourly rate for the amount of time it took to perform the deliverable.
- Value-based pricing — Charging how much a customer is willing to pay for the product.
For each product, you can specify how pricing should be determined within your tool and it can be generated automatically. You can also vary pricing depending on the product functionality if that suits your company and the sale you’re working to close.
Continuing the team sportswear example, if your company offers a pricing model that lowers the price per unit for high quantity orders, your CPQ tool should be able to calculate the correct price.
Let’s say your sportswear company charges $25 per jersey for orders of 20-40 units, and $18 per jersey for orders of 50-70 units. If the buyer you are working with is ordering a total of 60 units, your CPQ tool should know to calculate the total price using the $18 per jersey rate.
Once your customer’s order has been configured and the pricing has been set, it’s time to send over a quote. Using a CPQ tool, you can instantly send accurate quotes to all major stakeholders, speeding up the process for your sales team and customer.
By generating automatic quotes within your CPQ tool, you can create more accurate quotes in less time, and you can eliminate the back-and-forth that comes with sending quotes and invoices via email. This will allow you to streamline any necessary approvals and collect signatures electronically.
Another common feature of CPQ software is online payment integration, allowing you to collect payments online when you send the quote to your customer.
Not only does using a tool make it easier for you to send quotes to your customers, but using a CPQ tool ensures you’re sending polished on-brand quotes to your customers. This ensures your contacts are getting a consistent experience, which reflects well on you and your company as a whole.
Once the deal has been closed, CPQ software can help you facilitate more robust reporting practices to drive more sales in the future. If you use a CPQ tool that can connect directly to your CRM — such as the sales quote tool within HubSpot Sales Hub — you can maintain accurate records of what was sold in each deal, all accessible through your contact records in CRM.
Start keeping better sales records and take your invoicing process to the next level with a CPQ software solution. To learn more about setting prices that help you make the sale, check out this post.