Salesforce already offers out-of-the-box product and price books. It works well, plus, the product selection interface is getting a makeover in the next release (according to a DreamForce session I attended.) However, if your organization has a complex pricing model and you want to drive proposals using Salesforce, your Salesforce rep might suggest switching to Salesforce CPQ.
Salesforce CPQ (Configure, Price, Quote) is a comprehensive module that allows you to manage pricing, quotes, renewals and optionally billing (for a fee). Pricing varies depending on the edition, and the number of users for which you need licenses.
So, should you make the leap to CPQ? At a certain point, your organization may require tools that are more powerful than the out-of-the-box Product, Quote and Opportunity Line Items objects in Salesforce. Here, I outline how to recognize if you’ve reached that point.
Note, I will only discuss CPQ Pro, because if you’re already considering CPQ Premium, the out-of-the-box Salesforce tools aren’t for you.
Salesforce Out-of-the-Box Tools
Salesforce products and pricebooks allow you to create straightforward pricing models. This means:
- A single independent product (i.e., 3 Genwatt Power Motors which sells for $1000 each and 2 Genwatt Connectors for $200 each)
- These products can be grouped by pricebooks which allow for variable pricing for the same product (i.e., the same Genwatt Power Motor is $1,500 when sold to an enterprise)
- The product model if fully customizable, meaning additional fields, formulas, compensation calculations, and more, are used by thousands of customers
“What about proposals?”
- You can use out-of-the-box Salesforce quotes and quote templates. (But note that this isn’t currently supported in Lightning, and hasn’t received a feature upgrade in years, so it’s generally not recommended.)
- I typically recommend using a document generation AppExchange product like Conga or Drawloop . Both of these tools are far less expensive than CPQ and can generate documents on just about any data, meaning they work for MSAs, term sheets, and other types of documents. They also have native hooks for DocuSign, so, depending on your pricing model, you can create data-driven documents that can be automatically sent for signature.
According to Salesforce, this is the most popular Quote-to-Cash edition for businesses. CPQ Pro allows for complex product configuration, as well as dynamic pricing for partners and customers. Orders can be automated, as can renewals. There’s also the ability to forecast renewals. There are several tools for product configuration, including a product catalogue with advanced search and a product selector based on various parameters.
This tool is essentially a billing extension for orders and subscriptions managed by CPQ. Invoices are automatically generated and orders are integrated with various payment gateways. Plus, reporting capabilities let you track various revenue metrics. If your company needs invoicing and tax management, subscription management, and reports to help track business analytics.
“What is the key inflection point between out-of-the-box and CPQ?”
Choose CPQ if your company has the following needs:
- “Complex” product configuration, which includes
- Bundling (picking a group of products and configuring these)
- Product dependencies (only sell product A when product B is in the mix)
- Pricing rules (volume discounts, or dependant product discounts)
- Dynamic data-driven proposals — CPQ has an advanced sales order generation mechanism. This means you can have variable headers, sections, terms, conditions, and so on. For example, if the deal size is greater than $10,000, you can add enterprise-level terms and conditions. This level of dynamic document generation is difficult in the above-mentioned document-generation tools.
Note, this tool is fairly powerful, so it’s not suitable for long-form, text-filled documents; it’s best used for documents that have lots of merge fields and other such components. This tool will also require a good working knowledge of Salesforce objects, formulas, rich-text fields, and possibly HTML.
- Automated renewals — While there are some straightforward ways of creating renewal opportunities, CPQ does this in a fairly elegant way. Just be sure to deal with the headache of legacy contract data, as your renewal pipeline is only as good as the contract data you have managed.
CPQ can be quite the investment, especially for larger teams. Make sure to figure out your company’s specific requirements to determine which features are actually needed. Verify that your company will use most—if not all—features of CPQ. For example, if your company has modest pricing complexity but a very simple sales order, I’d recommend sticking with the out-of-the-box tools until you actually need the dynamic proposal generation offered by CPQ.
Finally, cost is a major factor here. CPQ implementations generally start at $15,000, with fully-managed implementations costing anywhere from $30,000 to $40,000. Add in the annual user cost of $75 per user, per month, and you need to ensure you’ve really made the business case for using this tool.