Customizing CPQ for Unique Industry Requirements: Best Practices

The nuances of your quoting process depend entirely on (a) the products you sell, (b) how you monetize them, and (c) the channels you use to sell them.

So, every industry’s standard quoting workflows are unique. And beyond that, your company will probably have slightly different requirements from even some of your close competitors.

But CPQ (configure, price, quote) is one of the most important tools in your sales tech stack. It enables your sales team to select/build products and bundles, price them accurately, deliver tailored quotes, and eventually facilitate the transaction. No matter what industry you’re in, you need it.

The good news: You can customize your system to fit the demands of your sales process. In today’s article, we’ll show you how.

Understanding industry-specific CPQ requirements

When you’re selecting CPQ software, the first thing you should know is which CPQ features are the most important for your industry. This depends on the unique complexities of your products and pricing models.

Let’s look at different industries and what their challenges are.

Manufacturing

In the manufacturing industry, products can be highly complex and customizable, with multiple configurations and pricing options. It’s important customers can visualize the product they’re buying and understand how each customizable feature affects the price.

Telecommunications

In telecom, products are often bundled with services, some of which are recurring and some of which are not. There are also usage-based components, like data usage. This makes quoting even more complex. CPQ must accommodate different service offerings, contract terms, and subscription options.

Software-as-a-Service (SaaS)

Software companies that offer services on a subscription basis have unique CPQ requirements. They need the ability to easily change pricing plans and adjust subscription terms. This requires a dynamic CPQ system that can handle complex calculations (e.g., ramp deals) and automate the process of updating contract terms.

They also have to consider the business metrics they use. SaaS companies have a whole book of sales, revenue, usage, and churn metrics other companies don’t have to worry about. So, they need a CPQ system that can integrate with their RevOps function.

Professional services

A lot of professional services are sold as fixed-fee projects or bundles. CPQ is ideal for this type of model because it can easily generate quotes based on a set scope of work. However, professional services can also be complex — retainer-based contracts, custom projects, milestone-based charges, and success-based pricing to name a few. You need a system that supports that.

Managed services

In a lot of ways, managed service providers (MSPs) have the toughest job when it comes to CPQ. They need a way to bundle services, hardware, and software from different vendors all with recurring costs. They also need to support different tiers of service offerings and manage complex contracts with service level agreements (SLAs).

Ecommerce

In the ecom space, most sales are customer-led, not rep-led. With so many sales coming through the web, you need an intuitive platform that integrates with your website and is easy enough to use that a customer can build a product, get a quote, and complete the purchase on their own. It has to be a guided process.

Examples of industry-specific CPQ use cases

Now that we’ve gone over some of the challenges different businesses face when it comes to product configuration and quoting, let’s look at how the CPQ system can actually be applied in different industries.

Manufacturing CPQ is all about product configuration.

If you’re a manufacturer, the most important consideration if you want to harness the true power of CPQ is the product configurator. The more complex your products are, the more you need a CPQ system that can handle multiple options, configurations, and contingencies (possibly thousands).

A few absolute requirements:

• BOM (bill of materials) management
• Multilevel configurations
• Part numbers, SKUs, and descriptions
• Visual configuration (with CAD automation for ETO products)
• Engineering change orders, revisions, and versioning

Since your ability to manufacture depends on product availability, it’s not just an advanced rules engine you need — you have to have ERP integration. That way, you can automatically pull from inventory, production, and/or supplier info.

Telecom CPQ needs advanced metering capabilities.

In order to track data usage and make sure customers are charged accurately for their usage, telecom companies need a CPQ system that integrates with their usage metering systems. Your voice, data, and messaging services have to capture metrics (e.g., call duration, data consumption, and message counts) and send them to your CPQ/billing system.

As for the quoting tool, it has to support multiple pricing models:

• Usage-based billing
• Flat-rate pricing
• Tiered pricing (e.g., the more you use, the cheaper it gets)
• One-time services (e.g., setup fees)

Be careful here. Lots of CPQ systems can support these things individually, but have limits on how many line items you can have with different attributes. You need to make sure your CPQ system can handle all of these types of pricing models without limitations, so that you can accurately quote (and eventually bill) your customers for these things.

SaaS CPQ supports complex subscriptions.

Software subscriptions (especially B2B SaaS) are a lot more complicated than most subscription models. Depending on the type of product you offer and the size of your customers, you might have to consider some or all of the following when optimizing your SaaS configurations:

• Flat-rate pricing (tiers and microservices)
• Per-user pricing (e.g., $29 per user per month)
• Usage-based components (e.g., cloud storage, API calls)
• Ramp pricing (for customers with fluctuating usage)
• Proration (for beginning or ending service usage at different times)
• One-time purchases (like setup, implementation, or custom development)

To create winning SaaS quotes, you have to be able to tack on all these different components. Let’s say you’re an enterprise CRM software vendor. Selecting the product tier is easy, but you have to be able to add one-time costs like custom development and data migration and potentially show multiple prices on the quote for ramp periods.

Since customers make recurring payments, it also has to have a subscription management component. Within your app, they need to be able to edit their subscriptions. And the system has to bill them, send renewal reminders, and handle revenue recognition automatically.

Professional services CPQ manages labor and resources.

Professional services operate at varying degrees of complexity — accounting services are a lot less complicated than engineering and construction, for example. But there is complexity in every professional services environment you need to be able to control.

• Engineers and construction companies need to estimate the cost of resources and labor hours to complete a project, with built-in safeguards for clients who have budget limitations.
• Accounting and legal services need to accurately quote hourly rates and track billable hours against fixed fees or retainer agreements.
• Some marketing agencies use success-based pricing, where part of the fee is based on results delivered (e.g., a % of revenue generated from a campaign).
• Financial services companies need to provide quotes with complex fee and commission structures for managing investments.

And for project-based businesses, they need a system that supports milestone schedules.

MSPs have to integrate their CPQ process with vendor systems and customer billing.

As an MSP, you are likely managing IT solutions for multiple clients. You may be using vendor partner portals, like Microsoft Partner Center, to manage licenses and subscriptions on behalf of your customers. Your CPQ system needs to be able to integrate with these vendor systems to pull in live pricing and availability information.

You also might need third-party quote importing. Some CPQ solutions integrate directly with vendors’ quoting tools, like Cisco’s, Dell’s, and HP’s, so sales and procurement teams don’t need to manually transfer quotes between systems.

Ecommerce CPQ needs to be intuitive for self-service sales.

Self-service sales are commonplace in the automotive, airline and travel, and retail industries. Without an expert salesperson to guide the process, this makes things potentially complicated.

Physical products need to be visualized. When someone orders a new Tesla, for example, they see a realistic 3D rendering of their car as they select options. This helps them confirm the end product matches their expectations, and can suggest upsells.

Some CPQ systems even feature AR functionality, meaning customers can try something on, see how it fits into their room, or verify the correct dimensions before purchasing.

For non-tangible products, like plane tickets, the configurator needs to be able to pull real-time data from airline systems to show available routes and their corresponding prices. Since prices change constantly, ecommerce CPQ might have to support real-time pricing strategies.

Best practices for customizing a CPQ solution

Before investing in a custom-built tool or integrating a third-party solution, it’s important to understand the “what,” “why,” and “how” of doing so.

Here are a few best practices to keep in mind:

Start by assessing your business needs.

Start with the specific requirements for your industry (which we’ve gone over above). Then, get more granular — which CPQ features are needed to fit in with your current infrastructure and provide the most useful data?

Look into your:

• Sales process
• Financial operations
• Ongoing relationships with your customers
• Revenue streams (e.g., direct sales, reseller partners)
• Quote complexity (e.g., basic subscriptions vs. SaaS + microservices + custom dev + maintenance)

These are the factors that will ultimately determine which features you need to implement and how high of a priority they should take.

Work with your end users to prioritize critical features.

Involving your end users (i.e., sales reps and/or customers) in the customization process can help you prioritize the features that will have the most impact on their work.

For example, if you have a complex B2B sales process and your team cites a lack of uniformity, prioritizing features like guided selling and sales playbooks will help you create a repeatable sales process.

Or, if you’re selling complex machinery, visualization and CAD integration will be essential.

Use built-in customization tools.

Customizable CPQs will have built-in features to make the process easier.

• Drag-and-drop interfaces
• Pre-built templates
• Integrations with common business tools
• Product catalogs
• Pricing rules
• Approval workflows

You can save a lot of time (and potentially eliminate most or all of the coding) if you can find a tool that’ll do most of the heavy lifting for you.

Look into custom development.

Custom-developed CPQ systems are the most complex. They’re also usually more expensive to implement and have a steeper learning curve.

That said, there are a few clear benefits: you’ll have a system that’s tailored specifically to your needs and can fully integrate with your existing systems.

Assuming you have the budget to support it, custom development is generally a good idea when your internal processes and data infrastructure are so complex that a pre-built solution won’t meet your needs.

Consider a CPQ solution built for your industry.

The easier way to invest in CPQ is to go for a platform that’s already optimized for your industry’s sales and finance operations. Most CPQ systems are actually not 100% customizable — they’re designed to meet the needs of a specific type of user.

This is a great thing. It means you don’t have to start from scratch or make major modifications to get the functionality you need. And beacuse they’re built for your industry, those vendors are constantly shipping new features that maximize efficiency and effectiveness for your specific business processes.

When evaluating CPQ software, look into the following areas:

• Your sales workflows. Longer SaaS sales cycles benefit from an end-to-end quote-to-revenue solution. If you sell through channels like MSPs, VARs, or distributors, consider a system with integrated B2B ordering features.
• Your revenue model. Ensure the CPQ supports your pricing and billing structures, whether it’s subscription billing, usage metering, outcome-based, or success-based models.
• Your current tech stack. If your CRM is a key part of your sales process, choose a CPQ that integrates seamlessly with it.
• Compliance. Subscription businesses need to ensure revenue recognition aligns with ASC 606 and IFRS 15. Certain industries, like pharmaceuticals and medical devices, may require additional compliance features within the quoting process.

Ready to start evaluating CPQ software for your company? Check out our extensive library of reviews and comparisons to get started.