What is CPQ?

    1/31/18 10:00 AM

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    What does CPQ stand for?

    The software industry has no shortage of three-letter acronyms, so let’s get right to answering the question.  CPQ stands for configure, price, quote.  More specifically, CPQ is a category of software that helps enable the business processes of configuring, pricing, and quoting a product or service.

    Evaluating CPQ software is very similar to evaluating ERP software. Don’t overlook any important features during the selection process.

     

    Get help from our free ebook: How To Select ERP… and Not Regret It.

     

    What is CPQ Software?

    CPQ software enables companies to configure their products and services, price them correctly, and provide quotes to their prospects or customers based on those configurations and prices. Why is software necessary to do this? A lot of companies have fairly complex products, and it’s not always possible for a human being to remember all the valid combinations of features or options available with a product or service. 

    CPQ software typically has an engine that allows companies to create rules and logic based on user input to “guide” someone into selecting a valid combination of product features. The easiest example of a CPQ scenario is an automobile. A user selects a base model, then chooses from the paint colors that are available for that model. Once they choose the paint color, only certain interior colors can be selected. One model or paint color may be more expensive than another, so when these choices are made, CPQ software calculates the prices automatically and then saves the information in a quote to record what has been configured and priced. Instead of the automobile manufacturer creating a part number for every combination of model, exterior paint, and interior color, these options are configured by the user.

    Sounds a lot like a configurator – what’s the difference?

    CPQ is an evolution of configurator software. There are products that do one single thing, like configuration, but a lot of products have evolved into more complete solutions. These more sophisticated systems do more than provide a solution to rules for features and options, parametric calculations, etc.  For example, CPQ software solutions also have functionality to integrate with ERP software, and provide presentation-grade documentation, as well as 2D and 3D renderings of products.  In my next blog, I will go in to more detail about some of these capabilities. 

    Does my company need CPQ software?

    Nothing beats a good conversation to find the answer to that question. If you would like to discuss it with someone who has a ton of experience in such things and is not a salesperson, click here to set up a time to talk. 

    If that’s not your cup of tea, or you aren’t quite ready to chat, here are some guiding factors that make you a candidate for CPQ:
    • You have a complex product or service with lots of features and options available.
    • Choosing one option affects “downstream” choices.
    • Your product requires mathematical calculations to determine feasibility, features and options, or pricing.
    • You have issues with salespeople quoting products that cannot be built, and you discover this once the quote arrives on an engineer’s desk.
    • Your product has a lot of possible “combinations,” and you don’t want to have a discrete part number for every possible combination you might sell.

    Are you searching for CPQ Software? If you would like to learn more about Infor CPQ, click here.

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    Bryan Foshee

    Written by Bryan Foshee

    Bryan is a Regional Manager at Visual South and has been working with the company since 2002. Prior to that, he was a consultant and implemented SAP in manufacturing, distribution, and service industries.