Picture this: you’re standing at the crossroads of software solutions, scratching your head, and pondering the eternal question, which is right for your business — CPQ vs Pricing Software? Choosing between these titans of pricing prowess can be as perplexing as trying to decipher hieroglyphics on a roller coaster, and it may all hinge on your organization’s overarching business objectives and the style of business or industry sector that your company is engaged. But fear not, we are here to help you unravel the enigma and guide you towards the perfect choice for your business!

In one corner, we have CPQ—Configure, Price, Quote—a sleek and nimble technology solution that promises to streamline your sales process, boost profits, and make your competitors quake in their boots. And in the other corner, we have pricing software, a mighty weapon armed with AI-informed optimization, margin protection, and the power to make your pricing strategies sing!

At Pricefx, with more than a dozen years helping businesses make their ultimate pricing solution, we fully understand that the decision can feel like navigating a labyrinth of pricing intricacies while dodging the potential pitfalls

Let’s dive into a ride through the world of pricing software solutions and embark on a head-to-head comparison that will demystify CPQ and pricing software, showcasing their pros, cons, and unique superpowers.

By the end of this article, you will have the knowledge and confidence to make an informed choice that catapults your business goals forwards.

Let’s kick it off with CPQ.

With CPQ—Configure, Price, Quote – watch your sales process undergo a larger-than-life transformation. CPQ is like having a sales wizard working on your sales team’s side, guiding them through the labyrinth of pricing with unrivaled precision.

It takes the guesswork out of configuring complex quotes, ensures accurate pricing based on real-time market conditions, producing personalized customer-centric quotes. With CPQ, you can streamline your sales workflow, eliminate errors in proposals, and unleash an unstoppable sales force.

With its potential to work together with the price optimization capabilities of pricing software, CPQ leverages data-driven insights to optimize pricing strategies for maximum profitability.

By analyzing customer preferences, purchase history, and product synergies, CPQ unveils a range of possibilities for expanding sales and delighting clients with tailored recommendations. But CPQ’s wonders extend beyond pricing—it serves as a strategic compass, illuminating upselling and cross-selling opportunities that may have gone unnoticed.

A CPQ solution offers a multitude of benefits that revolutionize your sales process and empower your team to achieve greater success, including:

• Efficient Workflow: CPQ solutions reduce administrative tasks and simplify complex B2B deals, allowing sales teams to focus on core selling activities.
• Accurate Pricing: With CPQ, you can confidently set prices based on real-time market conditions, ensuring competitiveness and customer satisfaction.
• Personalized Sales Experience: CPQ enables tailored sales experiences by offering insights and recommendations based on historical sales data.
• Configurability: You can quickly configure specific product portfolios, set pricing, obtain internal approvals, negotiate with customers, and iterate on quote conditions.
• Error Reduction: CPQ minimizes errors in sales proposals and contracts, leading to improved proposal quality and a smoother sales process.
• Increased Sales Opportunities: By providing accurate quotes faster, CPQ gives you a competitive edge, increasing your chances of winning deals, identifying upsell and cross-sell opportunities and expanding deal sizes.

On the flip side of course, for some companies a CPQ solution might not be what they are looking for, does not suit their business model or they simply do not have the resources to consider it. Other drawbacks include;

• Implementation: Implementing CPQ solutions may require initial effort, time and support of IT Teams and executive managers to integrate with existing systems and train sales teams.
• Cost: CPQ solutions can be costly, especially for small businesses with limited budgets.
• Learning Curve and/or User Adoption: Sales teams may require some time and effort to adapt to new software and fully utilize its capabilities.
• Configuration Support: Some CPQ solutions may have limitations in terms of configuration options, restricting the flexibility to meet specific business needs. Depending on the provider, accessing timely technical support and assistance may vary.

Yes – CPQ Software proves to be an invaluable asset for companies engaged in business-to-business or business-to-customer transactions under specific circumstances:

• If your organization faces delays in generating quotes for customers, leading to slow turnaround times.
• If your quotes involve complex products with intricate pricing models, making accurate and efficient quoting a challenge.
• If your business operates on a global scale and needs to provide prompt and precise pricing information across multiple regions or jurisdictions.
• If over-discounting products is resulting in revenue loss.
• If your quoting procedures are siloed, previous customer quotes are accessible only on the devices of the sales representatives who generated them.

Maybe Not – CPQ Software might not be suitable for every business scenario. While it proves highly beneficial for large organizations with extensive product ranges and cross-regional operations, other businesses may not require its functionalities. Consider the following factors:

• If your product range is not extensive and negotiated prices or configurations are limited, CPQ may not be necessary.
• If your sales representatives can generate accurate quotes without significant errors or delays, the marginal benefits of CPQ may not justify its cost.
• If your business revolves around large and highly customized project quotes, incorporating diverse third-party products and services, CPQ may not deliver the desired efficiency or effectiveness.

When contemplating an investment in CPQ, it is crucial to evaluate the potential benefits against the associated costs. Small businesses with straightforward product lines may find that the marginal financial advantages gained from CPQ do not outweigh its expenses.

Pricing software plays a crucial role in organizational setups by empowering businesses to manage their pricing effectively. While it is not a one-size-fits-all solution for all sales challenges, pricing software covers a wide range of functionalities and excels in supporting multiple pricing models. It enables businesses to streamline their price lists, automate pricing triggers, and maintain control over price-related campaigns. By leveraging a pricing solution, businesses can mitigate the risks of profit margin leakage, a common challenge faced by B2B companies due to misaligned pricing. Additionally, businesses can optimize their product portfolio management through pricing software, considering customer segments and product groups to arrive at optimal prices at the right time.

One of the main advantages of pricing software lies in its ability to harness the power of artificial intelligence (AI). With AI, businesses can optimize prices, swiftly respond to competition, and market dynamics, and make data-informed pricing decisions that drive revenue growth. Advanced pricing solutions, particularly cloud-based options, offer an integrated approach by allowing users to simulate pricing decisions based on real customer scenarios. These simulations not only reduce errors and ensure tailored pricing solutions but also enable businesses to evaluate the potential impacts of price list fluctuations.

By running simulations, businesses can make informed decisions regarding pricing strategies, adjusting input attributes or new price calculation logic to achieve the desired outcomes. This new generation of pricing software, driven by AI and sophisticated simulations, ensures that pricing decisions are optimized and aligned with the business strategy, resulting in improved profitability and competitive advantage.

The myriad benefits of pricing software include:

• Price Management & Automation: Pricing software allows effective management of price lists, automation of pricing triggers, and control over price-related campaigns.
• Margin Protection: Pricing software minimizes profit margin leakage by reducing pricing inconsistencies and aligning prices with market demands.
• Price Optimization: B2B and B2C businesses alike benefit from pricing software’s ability to manage product portfolios and calculate optimal prices based on customer segments and product groups.
• Artificial Intelligence: Leveraging AI, pricing software optimizes prices, reacts swiftly to market changes, and helps plan profitable pricing strategies.
• Data-Informed Decisions: With pricing software, businesses can make data-driven pricing decisions that drive revenue growth and increase profitability.
• Cloud-Based Solutions: Advanced pricing software, often cloud-based, offers a comprehensive approach with simulations, reducing errors, and tailoring solutions to customer needs.
• Flexibility: Pricing software provides businesses with the flexibility to adapt and customize their pricing strategies according to market conditions, customer preferences, and internal business goals ensuring agility and adaptability in a rapidly changing business environment.

Of course, like any technology, pricing software is not perfect for all businesses and may not be for everyone. Some potential drawbacks to consider include;

• Cost Considerations: Pricing software can have a significant upfront cost and ongoing subscription fees, making it less accessible for smaller businesses. As awesome as it would be, quality pricing software solutions are not free (but that said many also include a CPQ function as part of their set-up), but they sure can pay for themselves quickly. Learn more about the return on investment (ROI) of pricing software here and click on the image below if you would like to learn more about how much pricing software costs:

• Initial Setup Complexity: Implementing pricing software may require configuration and integration efforts, depending on the complexity of your business requirements.
• Integration Challenges: Integrating pricing software with existing systems and databases may pose technical challenges. If your IT Team has competing priorities or another big task in action (such as deploying a new ERP or CRM system), it may not be the best moment for your company to start on a pricing software project.
• Training and Adoption: Like any new software, pricing solutions require proper training and adoption by sales teams to fully utilize their capabilities. User adoption strategies within a company can be crucial to the new pricing software’s success. Without a good strategy, you will not achieve the seamless transition you are hoping for. There will be dissatisfaction, frustration, technical problems, and general chaos, instead of steaming your way to a record ROI time for your pricing software project.

Yes – Most types of business will benefit from the use of pricing software.

The larger the business, the more areas you operate in, and/or the more diverse both your products and customer segments are, the more actionable pricing insights will be on offer and the quicker your potential ROI.

Maybe Not – Pricing software (at the enterprise level at least) may be of less value to smaller companies or those without extensive product lists.

Long story short, if your organization does not produce many products and/or there is little differentiation in either the price or the regions you operate in, the less effective pricing software will be for your business. In fact, it may not even be cost-effective.

CPQ and pricing software provide valuable features to businesses, but the right choice depends on your business model and specific needs. Here’s what to consider:

• CPQ: Suitable for companies relying on customer-specific quotes, CPQ streamlines workflows, ensures pricing accuracy, reduces errors, and delivers personalized sales experiences.
• Pricing software: More relevant for businesses with price lists, pricing software offers effective price management, margin protection, price optimization, and data-informed decision-making.

However, your organization and your choice of business model could potentially benefit from both solutions.

Sometimes the choice is not between CPQ and pricing software; it is about analyzing your business structures and if you might require both. For example, your organization has 2 distinct business arms – one preparing customer-specific quotes and another that works off optimized price lists? Or do you need the power of price optimization to drive the ‘P’ of your CPQ?

For businesses dealing with complex products, customer-specific quotes, and dynamic pricing environments, leveraging the strengths of both CPQ and pricing software in one automated pricing solution like Pricefx can drive sales, profit and revenue growth and competitive advantage.

To make sure you get your choices right, it is sometimes best to know what to avoid.

See the handy article below about the 3 most common mistakes to avoid in choosing your pricing software to bypass the pricing technology hiccups:

Or if you’re already sure that your business could benefit from Pricefx holistic CPQ/Pricing Software solution, talk to one of our expert team now.

Happy Pricing!