When everything goes smoothly, sending a pricing quote works like an assembly line:
The sales rep hands off customer info to revops, who hand over pricing info to finance, and terms of service to legal, who then return the proposal to the sales team for approval.
But with so many moving parts, the possibility of slowdown—or breakdown—is real.
What if the customer wanted a specific contract type, but legal can’t approve it? Or what if finance is swamped and makes an accounting error?
Pricing complex products requires more than just dedicated team members and a series of disconnected spreadsheets. It needs a dedicated system.
CPQ software recognizes that pricing is one of the most important business processes to get right—it makes sure you deliver the prices most likely to close deals at scale.
What is CPQ?
CPQ (Configure, Price, Quote) is a software system sales teams use to determine the products and/or services to sell, the price of the product bundle, and how they will present the final pricing quote to the customer.
At a basic level, CPQ works like this:
- a customer requests a pricing quote
- a sales rep inputs that customer’s data into a CPQ tool
- the CPQ system delivers a comprehensive quote for the customer
The more complex your pricing and product offering is, the more likely CPQ will come in handy.
CPQ helps sales operators and leadership to gain control of the overall sales process and make sure the most accurate prices and discounts are sent out. With CPQ, you can negotiate new contracts at scale without worrying about relying on manual processes to deliver accurate quotes.
There are three main goals of CPQ, as a strategy and a tool:
- Price: ensure sales teams share accurate pricing with the customer
- Streamline: connect all of the disparate systems of the sales cycle (Sales, Operations, Finance)
- Scale: help sales ops admins and leadership automate the quoting process and evaluate its success
CPQ can be part of a CRM like Salesforce, or a separate, more agile approach, depending on your sales tools and process. Startups, for instance, may prefer to use a more lightweight pricing quote tool like Dock.
Why CPQ software is useful
CPQ takes the concept of white-glove selling and adapts it to scale. It takes care of the major and minor details that lead up to the pricing stage and through closing.
CPQ cuts down manual processing for sales leads, eliminates the need for development and finance resources, and reduces the chance of producing inaccurate or error-filled quotes.
This efficient system empowers teams to:
- Standardize pricing and approvals across an organization
- Scale pricing changes
- Create customer quotes automatically and easily
- Keep customer quotes organized
- Save sales reps time from administrative tasks
- Convince customers that pricing is fair and accurate
- Track the sale through revenue recognition, billing, and renewals
Most of all, CPQ ensures a great customer experience. As mathematical as pricing is, sales is also an emotional process. Customers need to feel like they are being listened to, and that your solution addresses their needs. While you handle the relationship, your configure price quote software handles the financial decision-making.
When customers receive personalized sales quotes that accounts for all the must-haves and nice-to-haves on their list, as well as transparent, customized pricing, they’ll be confident they’re in good hands.
The CPQ process
While CPQ is centered around the actions of “configure, price, quote,” the full capabilities of CPQ solutions are rich and varied, while still fairly simple.
At Dock, we break CPQ down into eight steps:
- Identify the products and services that will be offered.
- Develop pricing models for each product and service.
- Configure the products and services to meet customer specifications.
- Generate quotes based on customer specifications and deal terms.
- Obtain legal documents.
- Review and approve quotes.
- Send the approved quote to the customer.
- Recognize revenue.
Each step of the CPQ process is designed with providing the sales lead with the best shot at closing the deal. From the minute the customer has requested a pricing quote, the clock is ticking. They’re expecting a fully customized proposal, as soon as possible. CPQ will deliver the right quote before they’ve changed their minds or moved on to a competitor.
1. Identify products and services
Complex products, such as enterprise software services, and suites of apps, can be configured in endless ways to suit a customer’s needs. For most customers, a few key products and features will be your main selling points.
CPQ will identify the top products that meet the customer’s needs, and highlight their value.
It will also identify new products, similar products, and features in development so that you can plan to upsell and cross-sell accordingly.
2. Develop pricing models
Once you’ve identified the products and services you’re going to sell, the next step is to create pricing models for each product and service.
If you have been in business for some time, you probably already have pricing models in place. You may have created your models in Excel, and found that they work pretty well.
However, pricing model optimization is an ongoing part of the sales cycle. Having pricing models in place doesn’t mean pricing rules can’t be changed, or adjusted on a case-by-case basis.
Some examples of pricing models for software products:
- Per-unit pricing: Customer is charged per seat/license (10 licenses, $40/month per user)
- Flat-fee pricing: Platform-based (e.g. Dock has a platform fee of $300/month on top of the per-user fee)
- Tiered pricing: Pricing spreads across tiers. For instance: 1-10 users at one price, 11-20 at the next pricing tier, and 21+ at the third pricing tier.
- Volume pricing: Pricing depends on volume (e.g. 20+ users has a different price for all the users)
Deciding on a clear pricing model is incredibly helpful for making CPQ, and your overall sales process, easier to execute at scale.
At the same time, integrating your pricing models into CPQ software, as opposed to isolating them in Excel or other analytics tools, means that you can adjust your pricing instantaneously based on recent sales data and future sales forecasts.
3. Configure the products and services to meet customer specifications
This is the moment when you, or the CPQ software itself, decide what combination of configurable products to sell to the customer.
The options presented to the customer are customized to maximize the product’s capabilities according to the customer’s needs and wants. You may emphasize certain features, convenience of setup, or projected outcomes.
CPQ systems integrate with your existing tools—including your Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), accounting and finance tools, and sales enablement systems—so that the configurations are up-to-date and accurate. It’s important to not only account for the latest product developments but also for the latest conversations with the customer.
At the configuration stage, your salespeople will want to show the customer that they’ve been listening during discovery and have developed the best solution for them.
And while customers certainly desire personalized functionality, they will also want personalized pricing that fits their expectations and budget.
4. Generate pricing quotes
At the pricing stage, CPQ software takes all the inputs from the previous stages and calculates pricing options in real-time. The price quotes that are generated are based on the agreed-upon customer specifications and deal terms. Thanks to the CPQ software, quotes are accurate, up-to-date, and error-free.
While all sales professionals can benefit from CPQ, revops teams especially need to control what’s included in the order form before it’s sent to the customer. This way they can accurately project future revenue.
Factors that contribute to revenue projections include:
- Contract length
- Billing frequency
- Payment method
- Payment terms
5. Attach legal documents
CPQ allows salespeople to send out all the necessary paperwork that goes along with a sales contract, without involving legal for every deal.
The legal requirements most often involved in a sale are the general terms of service. CPQ software generates the terms based on the configuration of products being sold.
The buyer and seller may also go back and forth with custom redlining, which will be reflected in the final proposal.
6. Review quotes and get approvals
Pricing, unfortunately, is not a single step. There are many approval workflows you’ll have to go through internally and with the customer before landing on the right price. Your CPQ software should anticipate this process as a natural step in the sales pipeline.
Example form items that are subject to approval before the pricing quote is sent include:
- Order form total
- Discount size
- Number of units
- Custom terms
Within a CPQ system, you can create a rule engine for all the anticipated approvals. For instance, you could create a rule that deals above $100,000 or discounts greater than 20% require manager approval.
With these approvals in place, sales teams can have greater control over the pricing info that goes out to all customers.
7. Send the approved quote to the customer
The last step is the simplest: share the final quote with the customer. At Dock, we think the best way to do so is via a dynamic all-in-one pricing proposal.
The interactive sales proposal will include:
- A summary of products and services being offered
- The pricing model used to calculate price
- Adjustable pricing options
- Legal documentation and custom terms.
Bundling all of these documents and action steps in one place simplifies the sales process from the prospect’s side, and makes account management much easier and more flexible for the seller as well.
8. Recognize revenue
While not technically part of the “configure-price-quote” process, revenue recognition is the implied final step. Once customers agree to a price, you then have to follow through on the deliverables included in your contract.
For instance, if you’re an e-commerce office furniture business filling larger orders from various customers, your pricing process is not complete until the chairs and desks arrive.
Compliant revenue recognition in B2B SaaS is even trickier. Keeping up with orders, billing, and changing contracts means revenue will be recognized at various points for various customers. With the right software solution, you can ensure accurate financial reports and forecasts.
CPQ Software Solutions
While all sales teams can benefit from CPQ, choosing the right CPQ product depends on several factors. Sales pros are no strangers to costs and benefits, but as a refresher, it helps to consider factors such as:
- Your current organization size
- How flexible you need it to be (are you growing?)
- Does it fit with existing tools?
- Pricing model and billing structure
- Which features do you want to emphasize?
- Total price
Now, let’s look at the leading options for CPQ software.
Dock Order Forms are a flexible and modern CPQ for startups and scale˜ups looking to level up their sales operations without having to purchase and learn a complex system.
Order forms are part of Dock’s collaborative workspaces, which can be updated and interacted with in real-time, by both buyers and sellers.
It also allows for internal collaboration within your team. Order forms allow the product, design, and development teams to build a product library, which sales reps can draw from as they create the pricing quote.
Then the sales rep can share the pricing quote within the context of a more detailed and polished sales proposal.
Dock’s order forms give sales teams all the data they’ll need to manage the deal as it happens, as well as cross-sell, upsell, and add discounts—and then send the quote for signature.
And once a customer has converted, the customer workspace can be used to seamlessly transition the customer from sales to onboarding.
Salesforce Revenue Cloud
Salesforce CPQ is currently the most popular CPQ solution because it’s integrated with the ever-popular Salesforce CRM. It’s best suited for big enterprises already using Salesforce to manage customer relationships.
Salesforce even has three pricing tiers for its CPQ software - from advanced CPQ to a end-to-end quoting and billing solution.
The SaaS behemoth emphasizes revenue recognition as a key point in the selling process, and thus in their products. Sales teams working with the Salesforce CPQ get instant, actionable insights on the effectiveness of pricing.
Hubspot Sales Hub
Like Salesforce, Hubspot also has a CPQ product within its overall CRM system. Hubspot markets its CPQ system as a simple way to scale your company.
CPQ is included in all premium versions of Hubspot, so companies that are already subscribers should check it out.
The system includes drag-and-drop line items, e-signature functionality, and a wide array of Hubspot integrations so that pricing quotes are branded for your team and truly personalized to the customer.
DealHub is another tool that goes above and beyond just the CPQ process, though it’s not a complete CRM. Their platform is strongest on the financial side - it markets itself as a “Revenue Hub” that connects sales with operations and finance. It manages quote generation alongside Contract Lifecycle Management (CLM), Billing, and Subscription Management.
It’s also a no-code solution that integrates with existing CRM tools like Salesforce and Hubspot.
DealHub ultimately removes a lot of friction from the various departments involved in creating a deal, closing that deal, onboarding the customer, and managing subscriptions over the customer life cycle.
Oracle is another end-to-end CRM solution that works well for large enterprises, though its CPQ function is sold separately as well. Oracle CPQ is specifically designed to handle large volumes of sales data.
Oracle emphasizes how well its CPQ product connects your CRM to enterprise resource planning (ERP) systems “to guide the end-to-end order-to-cash process, shortening sales cycles with greater accuracy and leaving more revenue in your pockets.”
- PandaDoc: PandaDoc is a lightweight CPQ system that is focused mainly on the quote document itself, as well as contract docs. It provides over 750 quote templates and integrates with existing CRM tools for other functionalities.
- RevOps: RevOps calls their CPQ system “Collaborate, Price, Quote, and Sign.” RevOps is more focused on the calculations that go into pricing, allowing businesses to experiment with different pricing models deal to deal.
Why Dock Order Forms are different
Dock Order Forms combine many of the advanced functionalities of the enterprise CRM options with the lightweight flexibility of a more agile and modern tool.
To create an order form in Dock, you’ll be walked through a series of 5 steps:
What’s unique about the Dock CPQ process, is that order forms can be updated and interacted with in real-time. Your quote will be delivered as part of an overall sales or pricing proposal via collaborative workspace. That way, you won’t be sending the customer a standalone quote.
As Dock CEO Alex Kracov puts it, “That’s one of the most important pieces of CPQ–the goal is to make sure that the sales team is always sharing the right information with the prospects and so admins can set up their default terms.”
“The CPQ process is basically getting control over what sales teams are negotiating and then connecting all those systems together.”
To learn more about using Dock as a CPQ solution, schedule a demo with our team here.