CPQ stands for configure, price, quote, and is typically used to describe a software system used to produce fast and accurate sales quotes for complex and configurable products and services.

The overall purpose of implementing a CPQ is to make the sales process streamlined, faster, and easier to audit. By simplifying and automating steps in the quoting process, customers are quoted the correct, approved amount for the products or services they want to purchase. It also ensures that the appropriate product configurations and pricing rules are applied to each proposal, significantly reducing the amount of errors and inaccuracies that occur in a manual quoting system.

A CPQ generally refers to the three-step process a company undergoes in order to calculate complex product or service configurations for its customers.


Many businesses offer customized solutions and products that can be tailored to meet the needs of individual customers. However, many configurations are so complex that it can take an inordinate amount of resources and time before a sales rep can deliver them. A CPQ solution enables complex product configurations by clearly establishing rule-based constraints.

To give you an example, imagine your business sells three versions of your product: Starter, Growth, and Enterprise. These versions need to be paired with Basic or Premium support packages. Basic packages are paired with Starter and Growth product versions when the number of seats is less than 25. Premium support packages are paired with all Enterprise versions, in addition to Starter and Growth versions when the number of seats is 25 or greater.

Your constraints engine can take rules like these and ensure that product configurations are applied correctly, without needing manual effort to figure out the right combinations. This makes the product configuration process straightforward for the sales rep, offering the customer only the options they need.


Pricing is not a one-size-fits-all process; it’s dynamic and is impacted by market segments, economic factors, timing, length of contract, competition, and more.

CPQ software can automatically calculate prices of different product configurations for a proposal with complete accuracy, while taking into account any discounts or pricing rules added in the system. This not only saves sales reps time from performing manual pricing calculations, but it also ensures pricing is accurate and error-free.


CPQ software significantly improves the speed and accuracy of creating personalized quotes for customers, taking into account a company’s complex product configurations, pricing models, and discounting.

Approval workflows are a key part of the quoting process, and they ensure that the right people within an organization sign off on a quote before it’s sent to the customer for review and consideration.

What are the main benefits of owning a CPQ?

When implemented well, CPQ software can provide substantial benefits and bring additional value to your business. This includes:

Revenue growth

Businesses leveraging a CPQ solution to enable creative, win-win deal structures and open up new sales channels see the greatest return on investment. In today’s dynamic marketplace, it’s crucial to have the flexibility to offer deals that are tailored to the needs of customers while, at the same time, providing your business with new opportunities to grow revenue.

For example, a ramp deal can offer a low starting price to sign up more customers while guaranteeing growing revenue in later years for the seller. SaaS businesses that offer the most innovative deal structures will outgrow their peers while maximizing customer satisfaction.

Furthermore, new technologies like artificial Intelligence (AI) and predictive analytics, combined with CPQ software, are ushering in a new era of intelligent selling, generating fast and accurate pricing recommendations to maximize profit and identify cross- and up-sell opportunities.

Having this level of intelligence closes more deals faster and improves company-wide profitability. In fact, a recent report by Nucleus Research found that businesses averaged $6.22 for every $1 spent in CPQ deployments within the first three years.

Increased sales productivity

With manual quoting, sales reps refer to a pricing guide to search the required items for a proposal and then build a spreadsheet with product configuration and pricing. However, this process is time intensive and error prone and can have a negative impact on closing deals.

CPQ software provides businesses with guided workflows and system controls, allowing reps to easily select product configuration and pricing rules and quickly build error-free quotes. Time saved by sales teams can be dedicated toward other value-add tasks, instead of filling out paperwork. The same outcomes align with findings from Constellation Research, which reported that companies adopting CPQ see a 300% increase in quoting speed.

Improved customer satisfaction

CPQ provides a significantly improved customer experience by allowing businesses to provide personalized offers with pricing and product recommendations that fit the customer’s particular needs. Rather than waiting days or weeks to receive customized quotes, customers receive them quickly and without the human errors that create frustration and distrust. This ensures that the final product the customer is quoted for is exactly what will be delivered.

Reduced operational costs

As businesses look to standardize operations on a centralized platform, a CPQ solution should integrate with your existing Customer Relationship Management (CRM) and billing system to make the entire end-to-end process smoother. When such integrations are established, entire processes are streamlined and standardized, resulting in a reduction in overall operational costs.

This blog post is an excerpt from our eBook "The Definitive CPQ Buyer's Guide for SaaS." To read more, download the full guide here.