CPQ vs Proposal Software: Are You Paying for More Than You Need?

If you’re looking for a better way to create and send quotes, chances are you've come across CPQ software. But unless working out what you can sell and what it should cost is complex, CPQ may be more than you need.

So, before you add another tool to your sales process, let’s look at what CPQ actually does, who needs it, and when proposal software makes more sense.

What we'll cover:

1. What CPQ means
2. How CPQ software works
3. Signs you need CPQ software
4. CPQ vs proposal software

What does CPQ mean?

CPQ stands for configure, price, quote. Its main job is to make sure the offer is valid and the price is correct. Building a quote through CPQ software involves three steps:

Configure: choose what goes into the offer and prevent sales reps from combining products that don't go together.

Price: calculate what the final configuration costs by taking rules like discounts, order volumes, and contract lengths into account.

Quote: turn the information into a document for the client.

How CPQ software works

Before you start using CPQ software, you'll need to do a lot of configuration and conditional logic setup. CPQ needs to know what you sell, how options affect the pricing, which combinations are valid, and what your approval rules are.

For example, let's say you sell T-shirts. You offer different materials, shirt styles, and print locations. There is a discount for large quantities, and not all colors are available in all sizes.

Without CPQ software, that's a lot of information for a sales rep to track manually. Besides making the quoting process slower, a rep could apply the wrong discount or approve a combination you can't deliver.

That's why a part of CPQ setup is telling it exactly what those rules are so it can apply them as your sales rep builds the quote.

Signs you need CPQ software

Just because you don't run a huge corporation, doesn't mean you don't need CPQ software. A small manufacturer can easily have a more complex quoting process than a large agency selling a limited number of services.

Whether you need CPQ software depends more on how much needs to be worked out before the quote is created than the size of your company. 

1. Your products have dependencies

We're not talking dependencies as simple as choosing between three pre-created plans. Think more along the lines of product options that aren't compatible with one another.

For example, a chair manufacturer would have a set of materials that a chair can be made of. There would be different armrest options, back styles, and headrests, but not all options that would work for an office chair would be available for a barstool.

If a sales rep was building a customer's quote manually, they could accidentally pair up incompatible options. This would then create problems for manufacturing or result in realizing that the product can't be delivered at all.

When configured correctly, CPQ software applies those product rules while the sales rep builds the quote. It removes unavailable options or prevents an incompatible combination from being added in the first place.

2. Your pricing changes based on different factors

If your final price depends on more than a product and quantity, you might want to look into CPQ software. This includes companies that have different pricing for different countries, discounts based on contract length or volume, or products that are sold through specific sales channels.

The more variations you have, the harder it is for sales reps to manage them in a spreadsheet. CPQ software will apply those rules consistently, so the rep doesn't have to do the math on each quote.

3. Your approval process depends on the deal

If you need a manager to check a quote before it goes out, that doesn't immediately mean you need CPQ software. However, if your approval process changes based on the discount amount, contract value, or region, CPQ can help route to the correct person.

CPQ vs proposal software: What's the difference?

When it comes to CPQ and proposal software, there will be some overlap in features. You can use both to create quotes, they both use templates, and both include product catalogs.

The main difference between the two comes down to the level of complexity they're designed to solve.

If the hardest part of your sales process is figuring out which products and options go together, calculating the price, and getting the right approval? You're looking at CPQ software.

If you're working with a set product catalog, but creating the document, presenting the pricing, getting sign-off, and starting the work takes too long? You'll want proposal software.

If you already know which products or services can go into a quote, you don't need CPQ software to make those decisions for you. You need a better way to present the offer and move it forward.

With Better Proposals, you can save your products and services, then add them into our interactive pricing tables in two clicks. Clients can choose between packages, select optional items, and change quantities. The totals will be calculated automatically.

You can also reuse templates and approved content instead of building each quote from scratch. Once the document is sent, you'll see when the client opens, reads, or forwards it. They can then sign and pay you without being sent to another platform.

Sure, we won't stop a sales rep from pairing a headrest with a barstool. That's what CPQ is for. But if your products and prices are already set, it gives you everything you need to turn them into a quote, get it approved, and move the sale forward.

Don't pay for more features than you need

If your sales team needs to build product combinations and work around complex pricing, CPQ software makes sense. But if you have a set list of products and services that don't need a ton of configuration before you quote, CPQ will only add more setup, training, and maintenance to your sales process.

Better Proposals lets you create, send, track, sign, take payment, and onboard clients from the same place. Try it free for 14 days and get the full workflow without paying for complexity you don't need.