When it comes to today’s modern business models, you don’t need to configure products…you need to configure deals.
What do we mean by that?
Quick background: CPQ (Configure, Price, Quote) software is technology that helps sales teams quickly produce accurate quotes. When product offerings grow, many businesses choose to start using a CPQ to help manage the complexity of pricing.
To be honest, in most situations the majority of businesses can manage pricing and quoting for their products without a CPQ. Unless your sales team is making serious errors or losing prospects due to a long and messy quoting process, then a traditional CPQ isn’t going to bring great value to your business.
But what you do need is a system that can support your ability to configure deals.
Configuring products vs configuring deals?
This isn’t just semantics. The difference is huge.
Traditional CPQs weren’t built to support today’s modern business models. They are built to configure product cost. But today’s monetization models are built around outcomes, not products. Thus, businesses have shifted from configuring products to configuring deals.
Let’s take a closer look. In the old product world, you were swimming in a mountain of SKUs. Each SKU represented a shirt color, a hard drive size, an engine speed, etc. To configure a product, your customer would select their SKU, and tell you how much of it they wanted. You’d attach the price, sum the total, and stamp the quote with the date. When you’re quoting in a product world, your quote simply turned into an invoice and a bill of materials that shipped out with the product. That’s pricing a product.
In the subscription world, you’re thinking about how to configure a deal. It’s not just about a quantity, product, and price. You now have deals with varying prices, charge models, discounts, contract durations, and billing frequencies that change over the lifetime of a contract. In the subscription world, every quote fires off a series of actions that happen throughout the entire order-to-cash lifecycle.
Consider a typical subscription quote spanning three years that starts with an upfront platform fee, and includes an overage usage fee that’s billed monthly in arrears, and a discount applied in the first year while quantities are ramping up. Because all these varying parts of your quote span multiple years, you’re not just check summing the total like you did on a product quote. And now you’ve got a new set of forward-looking metrics — including annual contract value, total contract value, and total contract billing—to look after.
To configure deals you need the ability to manage these common deal scenarios and complexities:
So the question is: Is your business configuring deals or products?
Check out Zuora CPQ, the only solution purpose-built for subscription businesses.