Introduction to Sales Quoting and CPQ Software

Sales quoting is part of a larger process called quote-to-cash. The quote-to-cash process covers everything that happens from the opportunity to create a sales quote until payment for the sale is received. Delivering a consistently great experience across the quote-to-cash process is critical to business success.

For many transactions where price and product details aren’t externally listed, the sales team kicks off the quote-to-cash process by sending a quote, which can be either firm or flexible. If the quote is accepted, that means that the buyer understands the price they’ve been quoted and are agreeing to pay it in exchange for the service or product described. If it is not accepted, a couple things can happen: the prospect can choose to look elsewhere for their needs, or they can attempt to negotiate a new price quote. Price quotes can often change as the sales team learns more information. For example, when a potential software customer learns that they’ll need more licenses than previously thought, an additional bulk discount may be applied to certain line items in the quote.

A quote is just the beginning. Once all parties have agreed on a quote, they’ll often also want to agree to broader terms governing a long-term relationship, set up the actual order and bill and collect payment.

Sales quoting isn’t for the faint of heart - teams send out a lot of quotes and two thirds of them end up with no purchase made1. Thankfully, technology is available to streamline the quote-to-cash process.

What is CPQ software?

Configure-Price-Quote software (often referred to as just “CPQ”) helps sales teams sell the right combination of products, manage pricing and discounting and automate sending quotes for approvals.

• Configure: CPQ guides sellers to create combinations of products and services based on individual customer needs and suggests additional products when necessary.

• Price: CPQ helps manage pricing and discounting using preset rules and approvals.

• Quote: CPQ automates basic quote generation, sending quotes to potential customers, and integrates with eSignature software for digital contract approvals and signatures.

CPQ is typically integrated with a CRM solution to link prospect and customer data. Inventory, pricing, and other relevant information are pulled from ERP systems, while order management and billing tools are often used to close the sale, collect payment and update inventory. CPQ is also often integrated with a contract lifecycle management (CLM) system to build out automation for advanced contract generation, negotiation and automated workflows throughout the process.

Any organization with complicated offerings that involve customization, a subscription revenue model, bundling, partner products/services, complex pricing or a high volume of quotes can benefit from CPQ software. Sometimes sales involve a wide range of terms for things like payment, delivery, installation and/or add-on services from third-party partners. Without automation and guardrails put in place by CPQ, organizations would struggle to scale due to challenges like errors in quotes, approval issues and exposure to legal and compliance risks. CPQ helps simplify these processes with guided product suggestions, configurations bound by rules, pricing and discounting rules and fast quote generation.

Once a quote is ready, next up is getting the contract done. While many CPQ applications offer basic document generation capabilities to build proposals and embed quotes, these systems weren’t built to handle the complexity of the contracting process. This can increase friction at a key moment before closing a deal. We refer to this breakdown in the quote-to-cash process as the “Contract Gap” - and the next blog in this series will explore how to close it.

To learn more, check out the Docusign Agreement Cloud for Sales, which helps sales teams fully automate the agreement process from custom contract generation and signature to business workflows and document analysis.

1 https://www.bidsketch.com/blog/land-clients-with-fees