A Better Way to Quote: How to Make Complex Quotes Faster with CPQ

For centuries, merchants have grappled with the challenge of pricing their goods. In ancient Mesopotamia, clay tablets reveal complex pricing systems for everything from grain to precious metals. Medieval European guilds maintained strict pricing standards, while Renaissance Venice’s merchants developed sophisticated systems for quoting prices on exotic goods from distant lands. Even today, with all our technology, pricing remains both an art and a science.

In this article, as part of the CRM 101 series, I will be talking about Quoting and the so-called CPQ (Configure, Price, Quote). I will cover:

• The fundamentals of quoting systems.
• Essential terminology you need to know.
• When (and when not) to implement CPQ in your business.
• Steps for a successful implementation.

Ready to streamline your quoting process and uncover how CPQ can transform the way you sell? Let’s dive in!

The Context

Imagine running a business where every sale requires a custom price calculation. Maybe you’re selling industrial equipment with hundreds of possible configurations, or perhaps you’re offering consulting services where each project is unique. Now, think about how you create price quotes for your customers. Are you using Excel spreadsheets? Maybe your experienced staff are doing calculations in their heads? Or perhaps you’re still relying on that one pricing expert who “just knows” how to quote everything?

If this sounds familiar, you’re not alone. Businesses across industries face this challenge. That’s why a whole category of software systems has emerged, specifically designed to handle this complex process of configuring products, calculating prices, and generating quotes. The industry calls these systems “Configure Price Quote” or CPQ for short.

Early in my career, I worked at a construction company selling windows and doors. We had just two estimators – incredibly skilled professionals who could create detailed quotes with engineering calculations and technical drawings for every single project. They were amazing at what they did. But there were only two of them. 

At some point, we hit a critical point when we expanded into the new-for-us residential market. Suddenly, our quote requests skyrocketed, but hiring another estimator wasn’t economically viable, and it was a very lengthy process. We were only winning about 5-10% of our quotes, and when we ran the numbers, it just didn’t make sense to add another salary when 90-95% of the detailed work would lead nowhere.

This bottleneck forced us to think differently. We needed a solution that could handle a high volume without an inverse economy of scale. Instead of spending a full day on each detailed quote, we hired a team of developers who configured a system that could generate preliminary quotes in minutes. Sure, we sacrificed some precision – maybe our quotes were within 5%-7% accuracy instead of exact – but we could now send out 20-30 quotes per day instead of just one or two.

And we weren’t alone in this transformation. Let’s look at some industry numbers that might surprise you:

• According to Gartner’s research, companies using CPQ systems reduce quote generation time by an average of 73%.
• A study by Aberdeen Group found that companies with CPQ achieve a 105% larger average deal size.
• The same study revealed that CPQ users see a 27% shorter sales cycle.
• Forbes reports that 83% of companies using CPQ see improvements in quote accuracy.
• Perhaps most importantly, businesses using CPQ systems report a 17% higher lead conversion rate.

I’ll just leave this here to sink in. Let’s move on to our next topic – terminology.

Terminology

Let’s break down the key terms you need to know. I promise to make these concepts crystal clear with real-world examples that will stick with you.

 1. Quote to Cash (Q2C)  

The first term is Quote to Cash. Think of this as your money’s journey map. It’s the entire process from the moment a customer says “I’m interested” until you finally see the money in your bank account. Remember the last time you bought a car? From getting that initial price quote, through negotiations, and finally signing papers and making a payment – that’s Quote to Cash in action. Part of that process is our next term – Pricing Rules.

2. Pricing Rules  

Now, imagine training a new employee on how to price your products. You would tell them things like “10% discount for first-time buyers” or “premium pricing for rush orders.” That’s exactly what pricing rules are – your pricing knowledge digitized into clear instructions that a computer can follow. But sometimes, customers need help choosing the right product, which brings us to our next term – Guided Selling.

3. Guided Selling  

Think about a car salesperson. He would be asking you about your lifestyle, how many miles per year you are driving, and if you have a lot of family members. All these questions help him guide your buying decision. That’s guided selling in action. It’s like having your best salesperson digitally cloned and available 24/7, asking the right questions to match customers with the perfect products. Of course, sometimes these recommendations need approval, which leads us to our next concept – Approval Workflow.

4. Approval Workflow  

Imagine you’re playing a corporate version of “Mom May I?” That’s the approval workflow. When a sales rep wants to offer a 30% discount on a million-dollar deal, the system automatically routes it through the right approvers. No more chasing managers down the hallway with paperwork! But what about when products need to be sold together? That’s where our next term comes in – Product Bundles.

5. Product Bundling

Product bundles are not necessarily products that only come together. These could be your product compatibility list. For example, certain car models will be compatible with certain car parts, or if you sell certain products, they may come with certain additional services. It’s about making sure customers get everything they need for a complete solution. And speaking of getting deals done, let’s talk about our final term – Discounting Rules.

6. Discounting Rules

This is where the art of the deal meets systematic control. You know how car dealerships always seem to have room to negotiate? Discounting rules set the boundaries for these negotiations. They’re like the guardrails that keep your sales team from driving off a cliff – ensuring deals remain profitable while still giving flexibility to close sales.

Now that we’ve got our terminology straight, let’s talk about when you should actually consider implementing these systems.

When to Implement

But let me start with when NOT to implement CPQ. Recently I had a client – a small agricultural equipment company with just five people. They came to me excited about implementing CPQ in their Salesforce system. “We want to generate quotes with one click!” they said. Sounds great, right?

So I started asking questions. “Do you have a standardized product catalog?” No, they explained, most of their quotes were unique because they were sourcing specific parts for specific agricultural machines. “What about pricing rules?” Well, each case was different based on supplier availability and market conditions.

This is exactly when you shouldn’t implement CPQ. Think about it – if you’re building a house, you don’t start by installing smart home automation before the foundation is laid. The same principle applies here.

Let me be crystal clear about when CPQ is likely to be a costly mistake:

• When your product catalog is in chaos – if every sale is a unique snowflake, CPQ will add complexity, not solve it.
• When your pricing logic resembles a game of darts – if you can’t explain your pricing rules to another human, a computer won’t help.
• When your quote volume is low – if you’re only generating a few quotes per week, the investment might not make sense.

But here’s where it gets interesting – when DO you implement CPQ?

Remember my window manufacturing story? We hit a perfect storm of conditions:

• Our product catalog was standardized.
• We had clear pricing rules (even if complex).
• Our quote volume was overwhelming our manual process.
• Most importantly, we were losing opportunities not because of price or quality, but because we couldn’t generate quotes fast enough.

Think of it like this: imagine you’re running a custom steel fabrication shop. Your shop floor team knows exactly how to build what customers need, but your sales team spends hours manually calculating material costs, factoring in different grades of steel, accounting for specialized coatings, and figuring out complex machining time estimates. CPQ is similar. It’s for businesses that have:

• Standardized products or services (even if highly configurable).
• Clear pricing rules (even if complex).
• A quote volume that’s becoming a bottleneck.
• A need for consistent pricing across different sales channels.

Here’s a practical way to know you’re ready: if you can write down your pricing rules on paper, even if it takes 20 pages, you’re probably ready. 

The key is to understand that CPQ isn’t about making your pricing process more complex. It’s about making your existing complexity manageable. It’s like having an expert chef write down their recipes so anyone in the kitchen can prepare the same quality dishes.

This brings us to our last topic for today – how to implement CPQ in your business.

How to Implement

To implement CPQ, first of all, you need a CRM system. Most CPQ platforms are not standalone apps, but add-ons for CRM. So if you don’t have CRM, you should start by looking at implementing one. Also, not every CRM is compatible with CPQ, so be mindful when choosing the right solution.

If you have everything, then the first thing you will need to do is fix your product catalog. Here’s what you need to do:

• Gather all your products in one place (sounds obvious, but you might be surprised).
• Standardize your product descriptions and codes.
• Define all possible configurations and options.
• Most importantly, establish a process for keeping this catalog updated.

I recently worked with a manufacturing company that insisted they had a perfect catalog. Three months in, we discovered they had five different versions of the same product with different pricing. The lesson? Trust, but verify.

Secondly, establish your pricing logic. You need to play detective and uncover all your pricing rules. Here’s what typically happens:

• You start with “Oh, it’s simple, we just add a 30% markup.“
• Then someone mentions volume discounts.
• And regional pricing differences.
• And special customer categories.
• And seasonal promotions.
• And suddenly your “simple” pricing looks like a spider web.

Document everything. Even the exceptions to the exceptions. They have a habit of appearing at the most inconvenient moments. Be prepared to drop complexities for the sake of a less complicated system. Sometimes you will just have to accept that you will not offer certain pricing rules anymore for the speed.  

Finally, find the right software solution for you. Have you noticed that I have put this at the very end? This is important because there are so many different CPQ solutions on the market, all of them marketing themselves as the one-and-only solution, which is not true. A lot of the time, they are focused on one type of pricing. Hire a consultant, like myself, to help you choose the right solution. 

Final Thoughts

Let’s quickly recap what we covered in this article:

• We explored the evolution of quoting from ancient merchants to modern CPQ systems.
• We broke down the essential components and terminology of CPQ.
• We discussed when to implement it (and critically, when not to).

Every time I help a company implement CPQ, I’m reminded of that small window manufacturing business where I started. Just like those two estimators who could quote anything from memory, your business probably has its pricing wizards too. But unlike them, CPQ never needs a coffee break.

If you are looking to transform your quoting process with CPQ, my team at Muncly can guide you through the entire journey. Don’t hesitate to reach out to us today. We’d be glad to help you take the first step toward a faster, more efficient quoting system!