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Configure, Price, Quote software, commonly referred to as CPQ software, has grown in popularity in recent years as companies look to streamline quoting processes and improve pricing capabilities. However, when companies rely only on CPQ, they inadvertently solve only half of their pricing challenge. They miss out on effectively setting and optimizing prices to ensure sales reps make the best possible pricing decisions every time they quote. Before diving into why price optimization and price management software is needed alongside CPQ software, let’s start with a refresher on these solutions.

What is CPQ, Price Optimization, and Price Management?

CPQ

The Configure, Price, Quote (CPQ) software market has exploded in the past five years as B2B companies invest in better deal execution and customer-centric sales. Salesforce.com defines CPQ as, “a sales tool for companies to generate quotes quickly and accurately for orders. CPQ applications often work in tandem with CRM platforms, ERP programs, and other business technology, which helps ensure integrated data as well as accuracy.” Simply put, CPQ is a critical tool for B2B companies to close deals faster by streamlining the quote-to-cash process.

Price Optimization

Modern business moves at lightning speed through many sales channels. Order history, customer behavior, competitive concerns, available inventory, demand swings and geographical market specifics all uniquely influence prices from one selling scenario to the next. Unfortunately for companies that have large customer and product counts, using spreadsheets and other manual tools to set prices, at a granular enough level to reflect this commercial complexity, is difficult, if not infeasible. Without a market-aligned price at hand for each unique circumstance, companies lose margin or revenue. Price optimization software uses artificial intelligence and machine learning to calculate the profit and revenue maximizing prices for every microsegment of a business, enabling companies to provide tailored pricing guidance to salespeople that meets P&L goals and still wins business.

Read more: What is Price Optimization?

Price optimization is proven to be the most effective profit lever available to B2B companies, whether or not they are using a CPQ in tandem. Integrating optimized prices certainly increases the value and return on investment of CPQ, but price optimization is a powerful tool in it is own right, delivering tremendous value regardless of the commercial system that ultimately serves up optimized prices. 

Price Management

Price management is the function of creating and updating prices within a business. It includes setting and managing prices across a variety of price modes (or types of pricing that can occur in a business) such as list, matrix, negotiation, or customer specific. For mid- to large-size B2B companies, manual price management, typically done via spreadsheets, is increasingly impractical. Leading B2B companies are utilizing more robust price management software to help the pricing team tackle price management and administration challenges, streamlining previously burdensome tasks with price management software.

Read more: An Introduction to Price Management

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A Lack of “P” in CPQ

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