What's CPQ? A Complete Guide to Improve Sales & Engineering

  • Are slow, error-prone, and disjointed sales and engineering processes slowing you down? CPQ software could be the answer. In this comprehensive guide, we'll explore the concept of CPQ, its benefits for sales and engineering departments, and how the most robust CPQ solutions–complete with visual configuration–can enhance speed, accuracy, and customer experience. Let's dive in.


    What is CPQ Software? Understanding the Basics

    CPQ stands for Configure, Price, Quote. It's a software solution that streamlines the sales process by automating complex product configurations, pricing calculations, and quote generation. CPQ software is vital for businesses dealing with a wide range of products, customizations, and pricing structures.


    As customer demands for personalized products and experiences grow, businesses must adapt to remain competitive. CPQ software helps companies manage complex product configurations and pricing strategies while reducing errors and increasing efficiency.


    CPQ software doesn’t just benefit sales; it supports end-to-end engineering, which also helps engineering and shop floor teams. When a user configures a product on the front end, CPQ generates prices, quotes, and various engineering documents. By routing these documents to the right engineer or shop-floor operative, CPQ removes a massive amount of manual work.


    Key Components of CPQ Technology

    At the heart of any CPQ system are several vital components that work together to ensure a seamless configure- and engineer-to-order process from start to finish.


    Product Configuration Rules

    CPQ software uses so-called product rules to ensure configurations are optimized for margin maximization and engineering efficiency. These rules not only help to prevent incompatible configurations, but they also ensure the final product meets customer requirements.


    Visual Product Configuration

    Companies selling complex configurable products should leverage a CPQ solution with visual product configuration abilities. Visual configurators enable customers to see and interact with their customized products in real time. Sales reps, distributors, and other channel partners can leverage this interactive experience, as can customers themselves when sellers embed their configurators on their websites.


    Dynamic Pricing

    CPQ software simplifies pricing management by automatically calculating prices based on pre-defined rules, strategies, and external factors such as cost prices, inventory level, and demand. This ensures accurate pricing for each product configuration and reduces the risk of errors.


    CPQ systems with dynamic pricing calculate prices in real time during configuration. This functionality ensures customers get instant pricing feedback, enabling them to optimize products better and place immediate orders.


    Quoting and Proposal Generation

    Once the product is configured and priced, CPQ software generates a professional quote or proposal for the customer. This automation streamlines the sales process, saving reps a tremendous amount of time and ensuring customers receive accurate, consistent information.


    Integrations with CRM, ERP, and CAD Systems (e.g. CPQ for SAP)

    The best CPQ software integrates seamlessly with other back-office systems like CRM, ERP, PLM, and CAD. Integrations give CPQ access to relevant data and enable seamless automation of time-consuming processes like CAD design and manual data entry.


    End-to-End Use Case Example

    Consider a manufacturing company that sells customizable shelving solutions. With a visual product configurator, customers can drag and drop to design their shelving unit, changing colors, materials, and dimensions until they have their ideal setup. With augmented reality capabilities, they can see how the unit will look in situ by pointing the camera on their smartphone to the appropriate location.


    As the user makes selections, the configurator calculates pricing in real-time and generates a quote. Once the customer is satisfied, the CPQ software generates CAD files and BOMs, allowing the engineering and shop floor team to begin production immediately.


    Advantages of Implementing CPQ Solutions for Sales and Engineering


    Streamline Sales Processes and Reduce Errors

    CPQ software helps streamline sales processes and minimize errors by automating product configuration, pricing, and quotes. This efficiency leads to faster sales cycles and improved customer satisfaction.


    Improve Sales Productivity and Revenue

    CPQ software can help businesses close deals faster and ultimately increase revenue by streamlining the sales process. Sales representatives can focus on building relationships and closing deals rather than wasting time on manual tasks like creating quotes and calculating pricing for complicated products with endless add-ons.


    Enhance Customer Experience and Satisfaction with Visual Configuration

    Visual product configurators provide customers with an interactive and immersive buying experience, which can help differentiate your business in crowded markets.


    Support Complex Pricing and Product Configurations

    CPQ software can handle complex pricing structures and product configurations, ensuring accuracy and consistency in every customer interaction. The best CPQs have no-code rules engines, which enable non-technical users to set the constraints for how products are configured, priced, and sold. This increases agility in the face of rapidly changing customer requirements. It also reduces third-party development costs.


    Generate CAD Files, BOMs, and Other Engineering Documents

    CPQ software automates the generation of engineering documents like CAD files and BOMs, saving time for the engineering department and ensuring a smooth manufacturing process. 


    Happy engineers stay longer and do better work. Reducing time spent on the most menial, repetitive engineering tasks leads to a greater focus on R&D and a more productive, satisfied engineering team. 


    Connect End-to-End Manufacturing Processes

    By connecting the configure-to-order and engineer-to-order processes, CPQ software ensures seamless communication between sales and engineering teams, ultimately reducing lead times and improving efficiency.


    Choosing the Right CPQ Software for Your Business

    Here are some key considerations to keep in mind when selecting a CPQ solution.


    Vendor’s Industry Focus

    Choose a CPQ solution that caters to your business size and industry, as different providers may offer features tailored to specific markets. Manufacturing businesses should consider Epicor CPQ with its engineering and shop-floor automation features.



    Integration Capabilities with CRM, ERP, CAD Systems, and More

    Ensure the CPQ software you choose integrates seamlessly with your existing CRM, ERP, CAD, and other back-office systems to facilitate efficient data sharing and collaboration.


    Scalability and Customization

    Look for a CPQ solution that can grow with your business and offers customization options to meet your unique needs. Cloud-based solutions are inherently scalable and also integrate with other software more efficiently, thanks to APIs.


    Visual Product Configuration with AR and VR Capabilities

    Select a CPQ software that offers visual configuration tools, including AR and VR capabilities, to provide an immersive and interactive buying experience for customers.


    In Summary

    CPQ, short for Configure, Price, Quote, is an innovative software solution that bridges the gap between sales and engineering teams. It automates complex tasks like product configurations, pricing, quoting, and CAD, leading to improved sales performance, increased customer satisfaction, and a considerable competitive edge in the market.


    When companies integrate CPQ software into their workflows, they can eliminate manual tasks, minimize errors, and foster collaboration between departments. Additionally, visual product configuration empowers the customer experience, further contributing to a company's success.