CPQ stands for Configure, Price, Quote – referring to the process of quote generation for a sales order. A streamlined CPQ procedure is crucial—particularly for businesses that sell custom or made to order products.

Complexities such as cross-component compatibility logic and dependency resolution can cause friction in manual CPQ processes. They’re also challenging to upkeep, administer, and update.

Coupled with further business logic such as volume discounts and special rates, it’s easy to see why a robust software-based solution can revolutionise CPQ processes.

However, there's a distinct list of problems associated with a manual CPQ process:

• They're error prone: A manual CPQ process is highly error prone. There's potential for this to have serious consequences in the way of costs, reputation, and ability to deliver on the quote.
  • There may be cost implications to incorrect quotes: In terms of costs, underquoting can understandably cause issues, particularly if the quote was off by a significant amount. This is, regrettably, a fairly easy position to find yourself in when costing manually. The problem is amplified for large or complex specifications, with lots of "moving parts" and intradependency of components. If an inaccurate quote is accepted, and payment delivered, your business runs the risk of failure to deliver or tendering at a loss. For high-value specifications, this can spell disaster – particularly in cases where you feel unable to admit fault to the customer, for reasons such as reputation and long-term opportunity cost.
  • Inaccurate quotes could cost you your reputation: Imagine a scenario where a large specification was incorrectly quoted at a significant amount – let's say 25% or 50% less than the accurate price. The definition of a "large specification" depends on your particular business – but let's imagine the total value of the quote extends into the tens of thousands. If the quote is accepted and paid for, and fulfillment begins – only for you to discover the cost discrepencies at some point during fulfillment, you'll have one of two options. Either you'll inform the customer of the hefty discrepency, or absorb the loss. Whichever option you choose, either your business, or your customers' could find themselves in a tight spot. The customer's order may have an impact on the remainder of their project, and could tie in closely to existing budget allocations. If you choose to inform the customer of the mistake, but they've already set the wheels in motion for other portions of their project, you run the risk of an ugly situation where the customer now has to make tough decisions, such as repealing other portions of the project, or requesting a cancellation of the entire order if they're unable to foot the cost difference. This could potentially close the door to future orders from the customer, and if they feel strongly about their experience, there's every chance that others may come to learn of it sometime down the line.
  • You might not be able to fulfill the order: If you're relying on external suppliers or manufacturers, your cost disrepency might result in a situation where you quite simply cannot fulfill the order for the cost quoted to the customer. This kind of situation is likely to arise where the profit margin is either squeezed too thin, or you end up in the negative as a result of inaccurate quote.

CPQ software aims to automate the quote generation process, reducing the overall time spent on generating quotes, whilst simultaneously improving quote accuracy.

For custom or made-to-spec/made-to-order products, a manual CPQ process can take time and be prone to errors. This is because end products are often built from many interchangeable components. For complex specs, these components & subcomponents won't all be compatible with each other. It takes time and knowledge in order to specify the correct, compatible subcomponents of a specification and subsequently cost them with accuracy.

The result? A slow, error-prone quote generation process which relies heavily on spreadsheets, manual costing, and strong knowledge of the product and component range.

This is where CPQ software comes in. CPQ software automates the process, handling component dependency resolution, subcomponent compatibility, automated pricing, and quote generation.

With dedicated CPQ software, you can see accurate quotes generated in minutes or less, with accuracy guaranteed every single time.