Q&A - CPQs
What’s your experience with CPQs (Configure-Price-Quote systems) and how long do those implementations typically run?
My experience is that the more complex your pricing tool, the more difficult it will be to implement a CPQ system in a reasonable timeframe (6-9 months). The difficulty increases when the CPQ is not tailored to your industry.
More bluntly, I have not heard of a single successful CPQ implementation across the wide range of people and companies I met with this entire year. I’m sure someone, somewhere, got it done, I just haven’t come across it yet. Conversely, I’ve met with numerous service providers, cybersecurity providers, app developers, and other organizations who started down the CPQ road and bailed once it was the clear that implementation would be a never-ending process.
Non-industry specific CPQs work best for companies with a handful of simple pricing drivers, like SaaS companies with a few subscription tiers and product modules. Most services and software development companies, however, tailor their pricing to customer specifications that vary widely and thus require pricing tools that accommodate dozens of specification variables, deliverable units, mapping to customer grid formats, etc.
Tools of this complexity require multiple updates per year for new services, new roles, changing assumptions, etc. Throw in an acquisition or expansion to new geographies and you’re faced with relying on third parties for constant programming of CPQ updates, typically by external vendors (your pricing teams are masters of Excel, not full stack web programming).
I’d summarize my experience and recommendations this way:
If you’re going to adopt a CPQ for a complex business, find one specific to your industry and check multiple references.
Be prepared for major customization that continues long after you go live.
Budget for substantial ongoing technical support for the duration of your subscription.
Manage internal expectations for how frequently the CPQ can be modified.
Negotiate termination provisions that limit your losses if implementation fails.
Suggestion- see if you can modify your current tool to meet your needs without a CPQ. Most pricing tools live in Excel and can be updated to handle the types of items you’d think only exist with CPQs:
Integrations to CRMs, ERPs, project financials, timesheet systems, etc.
Forecasting and resource planning
I’m passionate about pricing tools and look forward to hearing your stories about past, present, and potential CPQ implementations. Give me a call.
As always, contact me or book a meeting to discuss how these principles can be applied to improve the performance of your business.