The global Configure Price and Quote (CPQ) Software Market is estimated to be close to $1.42 Billion. CPQ has become the default when it comes to scaling pricing and packaging.
But CPQ is notoriously hard to implement. Long, painful and often ending up in failure.
Can CPQ work for you? Could you just get away with a pricing calculator?
Product Marketer and Pricing Expert, Johnny Cheng (Former Director – Product Marketing, who helmed Pricing Strategy at Gainsight) illustrates the considerations and benefits of implementing CPQ systems, in the following excerpt from author Ajit Ghuman’s book, Price to Scale.
Not A Zero Sum Game
If you’re just doing feature package selling, you don’t really need a lot of sales tools or CPQ. It’s easy enough to do, especially because it’s so transparent to your customer. But once you start moving up and begin value selling, you must start creating tools for sales. Value selling needs considerable flexibility. And there is a level of complexity when you introduce it. This can be the deal killer as it slows things down - to a point where reps can’t defend the deal or price points.
In order to address this complexity and keep the flexibility, you have to introduce tools. In every company I’ve been at, I’d give them both the pricing calculator and a CPQ. I’m a strong believer that the pricing calculator is used very early in a sales cycle to do budgeting, rough numbers, and packaging. CPQ is basically a guidance selling process.
But CPQ Is A Sales Tool, Not A Deal Desk Tool
Whenever I mention CPQ, a lot of people feel that it is one of the worst tools to implement in the history of software. But I’m a huge fan of CPQ because it gives all that guidance and all those instruments. It also means less reliance on the Deal Desk and allows your company to scale. This is while giving you a lot of data on the backend.
There are a lot of positives about CPQ, but it is painful to implement, especially if never done before. While I led the process, it had to be in partnership with sales ops, IT, and finance — all the people actually building it.
It’s almost like the four legs of a table. If you’re missing any of the legs, it’s guaranteed that implementation will be bad, and there will be pitfalls. If your sales ops are very tuned in to sales, product, and the various spokes, things may be fine. But then, most sales ops try to build CPQ for the Deal Desk. CPQ is not a Deal Desk tool. It’s a Sales tool. Unless they have this perspective, it’s extremely difficult.
That’s why my guidance is that if you build something like a calculator in parallel with CPQ and say, “CPQ is the source of truth,” the calculator basically just follows.