by Guillermo Martinez

Whether your organization is going to embark on the journey of selecting and implementing a new CPQ solution or optimizing your existing solution, it is a good idea to balance the business requirements of the three components of CPQ.

CPQ stands for Configure, Price and Quote and your optimal solution should CONFIGURE, PRICE & QUOTE your products and services and do it in such a way that your organization satisfies its customer needs and demands. When defining requirements or optimizing any of the three dimensions of Configure, Price and Quote, it is always a good practice to think about the other two.

It is important to define all rules and constraints of the CONFIGURATION so that the configuration engine does not make mistakes and assures all components of the solution are compatible with each other, the solution can be built in your factory and, it works.

Now that your product can be configured, PRICING it becomes vital in providing an offer to the customer. It is a good idea to define if the price of the solution will update as components are added/updated or removed. It is also important to plan if the price would be given at a “complete solution” or at the “component” level and if the visibility of the component pricing will be given, always question if the components can be sold individually.

The definition of customer specific, tier or volume pricing among other pricing methodologies becomes crucial when defining the offered price to the customer. You always want to provide an optimized price to a customer.

As you continue to work on your CPQ solution, now it becomes crucial to deliver it to the customer in form of a formal or legal QUOTE.

When defining business requirements for quoting, it is important to leverage all the customer information you have used to configure and price the solution, be sure to continue to use or re-use the customer master record so, that Sold To, Bill To and Ship To information is carried forward to the quote and there is no need to enter it or re-enter when creating a quote document.

It’s also a good idea to account for quote standard templates that can be re-used for a specific customer or even better, for a specific department or role within the customer organization (Procurement, Asset Control, Accounting and Finance, IT, etc.). The idea is that your company can present the quote to different customer stakeholders in a usable manner without having an army of quote specialists creating a new customer record and trying to figure out the correct configuration and pricing for the offered solution.

You may want to define in the set of quote requirements, the ability to add proposal information such as your company background and product specification or maybe some customer reference projects. It may be a good idea to have the proposal information optionally added or removed to the quote with the click of a button. After all, you want the marketing collateral information to be meaningful to the proposed solution and only added in the event that you are acquiring a new customer, selling a new product or by customer request. You do not want to inundate your customer with pages and pages of non-relevant material or when the customer have previously bought the solution or simply they do not want the proposal material. When product information is included as part of the proposal, make the connection to the configured product so it’s current and relevant.

Terms and conditions (T&C’s) are an important part of the quote but does your customer really want to see the T&C’s for every single quote interaction? It would be a good idea to have the ability to create a draft or budgetary quote and with a touch of a button convert it to a legal document or quote containing all T&C’s and the required legal verbiage.

There are, of course, many other business requirements that can be defined when selecting or optimizing a CPQ solution the take away here is to recognize that for every CONFIGURE requirement there is a PRICE and QUOTE requirement. We are not suggesting that there is a one to one relationship but rather a point or points on integration between the C, P and Q.