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Jon Taylor

Head of Brand & Content

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A guide to CPQ software (and why you need it)

By Jon Taylor on May 7, 2024 - 5 Minute Read

Think about when you step into a coffee shop to order a coffee. You don't just order a coffee. You need to pick what coffee you want, the size, the coffee roast, the flavorings… you get the idea.

Now, imagine if the barista had to look up the price of each variant of your order on a spreadsheet before manually typing it into their register. Then, they give you a quoted price for the coffee. Finally — if you’re happy with the quote — you pay, the grinder starts up and your coffee gets made.

It’s not very efficient…is it? 🤔

This is an example of a manual process called Request for Quotation (RFQ). It (clearly) wouldn’t fly in customer-facing outlets like coffee shops. In fact, even in more traditional industries like manufacturing and construction, it’s being replaced with a more modern and efficient system called CPQ software. 

Instead of manually pulling data from spreadsheets, this CPQ software leverages data from your database to automate the process and create quotations in seconds. In this guide, we’ll run through what CPQ software is, how to use it and why AI-powered CPQ software is changing the game for forward-thinking businesses. 

Let’s get started 👇

What is CPQ software?

CPQ software is a system that allows a company to generate quotes using real-time data to determine how much a product or service will cost a customer, while at the same time maximizing margin.

Also known as configure, price, quote software, CPQ software can calculate complex quotes instantly using a range of preset variables.

Let’s say a building developer has approached a leading manufacturer of windows to get a quote for an upcoming project, which contains several different products and configurations. Instead of manually calculating the quote, the window manufacturer can use CPQ software to automatically pull pricing information for each product to instantly create an accurate quote. 

Let’s take a better look at how CPQ software can change how you build quotations for your customers 👇

The main benefits of using CPQ software

Whisper it…but most sales reps don’t actually spend their days selling! 😬 

According to the State of Sales Report, just 34% of a sales rep’s time is spent on actual sales tasks. The rest of their day is eaten up doing admin work — like generating customer quotes.

Just think about how some quotes are created. It’s not uncommon for pricing decisions to be made using gut feel decisions or an impossible-to-read spreadsheet packed full of product codes. A sales rep is sitting in front of their computer trying to decipher all of this data and pull a quote together to send to a customer before the promised deadline.

The result is a sales rep who has lost hours of their week building quotes. Even worse, they’ve likely lost a good chunk of revenue thanks to a less-than-accurate customer quote. 

CPQ software can turn the quotation process into a quick couple-of-clicks job. When Salesforce asked sales reps how CPQ software helped them, users said it enabled them to create quotes ten times faster while cutting approval times by 95%. 

The efficiencies of CPQ software happen in two key areas of the quotation process: 

Reducing manual CPQ errors

If sales reps and account managers are creating quotes from scratch or bundling data from databases, it’s only a matter of time before a human error is made. It might be something as simple as inputting a wrong decimal point, or a major mistake like giving the wrong discount. CPQ software cuts out manual errors by using custom parameters, pricing rules and product/service availability to create accurate quotes based on the data you input. This helps your sales team build accurate quotations every time.

Accelerating deal timelines

The more deals in a sales pipeline, the more (potential) money in your company’s pocket. However, sales reps can only handle so many deals at a time. CPQ software can help close deals quicker by getting accurate quotes to customers in minutes, not days. 

As CPQ software pulls data directly from your database using custom parameters, your team can build out accurate quotes without getting lost in a spreadsheet. This means more time for your sales team to spend selling — and more money in your company’s pocket thanks to accurate quotes. 

As CPQ software pulls data directly from your database using custom parameters, your team can build out accurate quotes without getting lost in a spreadsheet.

Why CPQ software beats request for quotation

The way we approach manufacturing and supply chain quotes has changed. A lot.

The old-school way relied on a Request for Quotation (RFQ) process. But this can be manual and laborious. While a sales representative is busy manually building out a quote, the customer may shop around and end up using a competitor who is quicker to respond. Not only does this leave money on the table, but the sales team has also put in hours of work without anything to show for it. 

Just think about why RFQ is no longer viable for manufacturing, construction and consumer goods. If a sales rep wants to give a custom price, different product configuration or a bulk discount, they must dig through data and spreadsheets to figure out how to do it while maximizing profits. It also means:

  • Calculating custom product prices is complex and each item must be quoted manually
  • The employee handling the quote needs to know each product well to accurately configure product and service requirements
  • Hours are lost to this manual, time-consuming process

CPQ software is a way to give customers the right price without giving away too much discount and overall margin.

The nuts and bolts of using CPQ software

CPQ software works in three simple steps: configure, price, quote.

Let’s take a closer look at at how each step works 👇


Think of this step as laying the ground rules for how your CPQ software will produce quotes. 

Here, you will input parameters and rules for the CPQ software to follow when your team builds out a quote. For example, you can decide product customization options, what discounts can be added, minimum order quantities and any product-specific constraints like weight, size or material. 

Let’s use our earlier example of the building developer seeking a quote for a bulk order of windows. 

The project requires a bulk order of 1000 windows for the development, but as the renovation is taking place in a listed building, the windows must have wooden frames, a specific color and triple-glazed glass. There are also several different sizes for each window. 

Using CPQ software, the window manufacturer can add constraints to every window it stocks and create possible combinations (color, size, glass) ready to quote.


The next step in the quotation process is getting customers a price. During the traditional RFQ process, this is the final step of a quote. But, CPQ software allows sales reps to see real-time prices as they add each product or service to a quote.

Let’s jump back into our building developer project. 

The window manufacturer now knows that the developer requires:

  • 500 orders of 488mm x 488mm windows with black wooden frames and triple-glazed glass
  • 500 orders of 915mm x 1050mm windows with black wooden frames and triple-glazed glass

When these products are entered into the CPQ software, it finds the requirement of the black wooden frame is an extra cost, as the window’s base frame color is natural pine. So, an extra $25/frame is automatically added to the quote. However, the CPQ software also calculates that, due to the size of the order, the customer automatically qualifies for a 12.5% discount on the final quote price. 


Finally, the final stage is double-checking the CPQ configured quote before it’s ready to send to the customer. 

Most CPQ software will allow you to send the itemized quote with an expiry date to the customer, with an option for them to digitally accept it. 

In the case of the window manufacturer, the detailed quote is emailed to the developer with a detailed breakdown of the required products, sizes, additional costs, lead time and bulk discount. The developer can then accept or deny the quote based on the manufacturer’s capacity and lead time. 

Keep in mind that this play-by-play barely scratches the surface of what CPQ software is capable of. To really see how it can help your business, we need to inject a little artificial intelligence (AI).

How using AI-powered CPQ software can change your quotation process

We’ve already talked about how a coffee order would look under the old RFQ-style quoting process. 

The truth is, ordering a coffee is a simple transaction. Apart from a couple different options for cup size, bean type and flavorings, there isn’t a lot the system needs to do. What isn’t so simple to calculate are product price fluctuations, supply chains and customer purchase patterns. 

This is where AI models come into play. This technology can make sense of various datasets across your company to optimize every quote and maximize every deal. We created our automated Quote Pricing application so businesses could go beyond basic CPQ capabilities and predict the likelihood of a quote being accepted using features like the below… 

AI-powered dynamic pricing

Supplier prices, market conditions and the wider economy all impact what prices you should charge to meet profit goals. AI-powered pricing automatically calculates the best price to charge for each product based on margin, stock availability and past sales to maximize the chance of the quote being accepted.

Personalized quotes

Every customer’s needs are different, and your quote should reflect this. AI helps you build quotes based on historic customer sales, lead times and product attributes. It then gathers this data and calculates every quote on a per-client basis to ensure they get a price they are happy with while maintaining your revenue goals. 

Predictive insight

Using predictive price modeling, price elasticity and real-time data, AI can predict what discount and price to give a customer based on past sales. The end price will be the figure most likely to get accepted. 

Here’s what the process looks like on Peak. You open Quote Pricing on the platform and hit create quote. Then, add in your customer, required products and quantity:

Peak's Quote Pricing AI application

Using real-time data, the CPQ tool will create a quote based on list price, discounts, optimized margins and the likelihood of the prospect accepting the quote:

AI-powered CPQ software screenshot

Once you’re happy with the quote, it can be downloaded to your system — ready to send to the prospect. All you need to do is track the quote and (fingers crossed 🤞), mark it as won when the customer happily accepts it: 

Quote Pricing from Peak

Want to learn more about AI-powered CPQ software?

Book a demo with our team of pricing experts here.

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