What is CPQ (Configure, Price, Quote)

What is the meaning of CPQ?

CPQ stands for Configure, Price, Quote, a sales enablement process designed to help businesses deliver fast, accurate, and customized quotes for their products or services.

At its core, CPQ ensures that sales teams follow a structured process to configure offerings based on customer needs, calculate precise pricing, and produce professional quotes that are free from inconsistencies.

This approach is particularly beneficial for businesses that offer customizable products, complex pricing structures, or highly tailored service packages. Without CPQ, sales teams often rely on manual calculations, which can lead to errors, delays, and lost revenue.

The CPQ process

The CPQ process consists of three key stages: Configuration, Pricing, and Quoting. Each step plays a crucial role in ensuring customers receive an accurate and competitive offer tailored to their needs.

Without CPQ, sales teams often spend significant time navigating product catalogs, verifying pricing structures, and manually creating proposals. The risk of errors increases, leading to misquoted prices, configuration conflicts, and lost deals. By automating these steps, CPQ allows businesses to improve efficiency, ensure consistency, and close deals faster.

Let’s break down each stage in more detail.

1. Configure

The first stage of CPQ is the configuration process, where businesses tailor products or services to meet customer requirements. This is especially critical for companies offering custom-built products, subscription-based services, or packages with multiple variables.

A CPQ system helps sales teams and customers select the right options while ensuring that only valid and feasible configurations are available. This eliminates the risk of errors, such as choosing incompatible components or missing required features.

For example, a car manufacturer using CPQ would allow customers to configure a vehicle by choosing the engine type, interior features, exterior color, and technology add-ons, all while ensuring that selections are compatible.

2. Price

Once the configuration is complete, the system calculates the price based on business rules and pricing structures. The pricing model can be influenced by multiple factors, including:

• Base product or service price
• Customization or add-on costs
• Volume discounts or bulk pricing
• Region-specific pricing variations
• Seasonal or promotional discounts
• Subscription-based or tiered pricing models

By automating the pricing step, CPQ software eliminates inconsistencies, prevents pricing errors, and ensures that customers receive a transparent and fair quote.

3. Quote

The final step is quote generation. A CPQ system produces a detailed, professionally formatted quote that includes:

• A breakdown of the configured product or service
• Itemized pricing details
• Terms and conditions
• Estimated delivery timelines (if applicable)

With an automated quote generation process, sales teams can respond to customer inquiries faster and more accurately, increasing the chances of closing deals efficiently.

What is CPQ software?

CPQ software is a digital tool that automates the Configure, Price, and Quote process, helping businesses streamline their sales operations. It provides a structured system that ensures all configurations, pricing models, and quotes adhere to company policies and industry best practices.

This type of software is particularly beneficial for ETO (Engineer to Order) and MTO (Manufacture to Order) companies,  where products or services are highly customizable.

Examples of such companies are:

• Industrial machinery manufacturer – custom products with varying sizes, tools and accessories.
• Vehicle manufacturer – designing vehicles with specific chassis, doors, or equipment configurations
• Building product manufacturer – supplying products for the building industry with custom sizes, materials or other specifications based on project needs
• Modular furniture manufacturer – offering a wide range of options for materials, colors, sizes and modular setups for furniture

By integrating with CRM (Customer Relationship Management) and ERP (Enterprise Resource Planning) systems, CPQ software ensures that all data flows seamlessly across sales, finance, and operational teams.

What can CPQ do?

A CPQ system removes inefficiencies in the sales process by automating critical tasks that would otherwise require manual effort. Some of the key capabilities of CPQ software include:

• Automated product configuration – Ensures only valid combinations are available for selection.

• Dynamic pricing calculations – Adjusts pricing based on business rules, discounts, and external factors.

• Professional quote generation – Produces polished, structured quotes with accurate details.

• Approval workflow management – Streamlines internal approvals for discounts and special pricing.

• Sales performance analytics – Provides insights into quote conversions, pricing trends, and customer behavior.

 These capabilities help sales teams work faster, reduce errors, and increase deal closure rates.

What is an example of CPQ in action?

Consider an electric bike retailer that allows customers to customize their purchase online. Using a CPQ system, the retailer can:

1. Configure – Allow customers to select motor power, battery range, frame type, and accessories.

2. Price – Automatically calculate the total cost, applying any discounts or financing options.

3. Quote – Generate a detailed quote that outlines the bike’s specifications, pricing, and expected delivery time.

By using CPQ, the retailer eliminates manual quoting errors and ensures customers receive accurate, transparent pricing in real-time.

What are the benefits of CPQ in business?

Implementing CPQ software offers a wide range of benefits, including:

• Faster sales cycles – Automating the quoting process reduces delays, allowing deals to close faster.

• Improved accuracy – Eliminates pricing errors and misconfigurations.

• Higher revenue – Increases upselling and cross-selling opportunities by recommending additional features.

• Enhanced customer experience – Provides customers with quick, transparent, and accurate quotes.

• Scalability – Supports growing sales teams and complex product catalogs without increasing administrative burdens.

 These benefits make CPQ an essential tool for businesses looking to increase efficiency and drive revenue growth.

Do you need CPQ for your business?

CPQ is particularly beneficial if your business:

• Offers customizable products or services

• Uses complex pricing models with discounts, tiers, or subscriptions

• Faces frequent pricing errors or inconsistencies

• Spends too much time manually creating quotes

• Wants to accelerate deal closures and improve sales efficiency

 If your sales process is straightforward with few variables, CPQ may not be necessary. However, for companies with highly customizable offerings, it becomes an invaluable tool for increasing efficiency and accuracy.

How Sovelia can help with CPQ

Sovelia Configurator is designed to help businesses streamline their CPQ processes, ensuring accurate product configurations, seamless pricing automation, and professional quote generation.

By integrating with existing CRM, PLM and ERP systems, Sovelia Configurator provides a centralized solution for managing sales workflows efficiently. It enables companies to eliminate errors, respond to customers faster, and increase revenue through smarter sales automation.

To learn more about how Sovelia Configurator can optimize your CPQ process, contact our team today or book a demo to see it in action.