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Understanding the Benefits and True Cost of Salesforce CPQ

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Phani Madhav Chegu,

May 23, 2023

Understanding the Benefits and True Cost of Salesforce CPQ

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Here’s an insightful post that explains the benefits of using Salesforce CPQ and delves into the factors that determine the cost of the robust Quote-to-Order (Q2O) solution.

The business landscape is in the midst of a dramatic transformation — the advent of the COVID-19 pandemic and the subsequent recession in the global economy had a profound negative impact on firms, as they have to deal with vagaries in demand for their products and disrupted supply chains.

To resolve these challenges, several companies are making efforts to enhance the efficacy of their business processes. One of the key areas most organizations are focusing on is ensuring their Quote-to-Order (Q2O) cycles are short and robust. An efficiently-executed Q2O cycle plays a key role in enabling businesses to sell effectively and improve their profit margins.

Many companies are leveraging cutting-edge Configure, Price, Quote (CPQ) software systems for enhancing and automating their Q2O cycles. One of the most widely used applications to improve Q2O efficiencies is Salesforce CPQ. Today, we will look at the benefits of using the novel tool and the costs associated with it.

What Is Salesforce CPQ?

Salesforce CPQ is a feature-rich product that allows you to maximize your Q2O efficiencies. Available as a part of Salesforce Revenue Cloud, this novel tool harnesses the latest technology to deliver the right solutions fully customized to meet the specific needs of your clients in a hassle-free manner.

What Are the Benefits of Using Salesforce CPQ?

Salesforce CPQ comes with several useful capabilities to increase your quoting efficiency and accuracy; the novel product also helps you improve customer experience considerably by enabling you to come up with accurate quotes and product configurations perfectly tailored to their unique requirements. The robust CPQ solution helps you:

  • Develop technically-valid quotes quickly using guided selling tools
  • Enjoy high levels of flexibility and scalability to meet your dynamic needs
  • Deliver excellent support to all revenue-generation models without hassles
  • Create a robust pre-defined quote structure to eliminate quoting errors
  • Provide the right, timely insights to sales teams to up-sell and cross-sell with high efficacy
  • Come up with complex deal scenario models to pinpoint and prevent revenue leakage
  • Implement a unified data model to simplify maintenance of product catalogs and price books
  • Close deals rapidly by streamlining approval workflows and providing complete visibility
  • Enable contract pricing to meet the requirements of repeating purchasers seamlessly
  • Share quoting information with partners in real time and enable them to quote at their rates
  • Enhance quote generation efficiencies by facilitating creation of precise quotes in MS-Word or PDF
  • Ensure effective automation of all post-sales tasks and generate orders from approved quotes
  • Generate dynamic quotes that allow insertion of specific terms using a clause library

We’ll now proceed to examine the factors that play a major role in determining the cost of a Salesforce CPQ implementation.

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Key Factors that Determine the Cost of a Salesforce CPQ Implementation

The cost of a Salesforce CPQ implementation will be based largely on the aspects listed below.

Completeness of Product Catalog

You must ensure your product catalog is clean and complete. If your catalog is messy and/or incomplete, you may face problems in migrating the catalog into Salesforce CPQ. You also need to make sure the rules pertaining to product configuration are properly defined. This is even more important if your products are highly complex; you require detailed documentation to prevent errors in configuring the products.

Data Documentation

It is advisable to prepare an exhaustive list of systems that your data must integrate with internally and externally. Most organizations re-engineer their quoting processes while implementing Salesforce CPQ. Modifications to the quoting processes may affect external integrations with accounting systems, online communities, web-based resources and so on.

Data Quality

Staying on with data, you need to see the data that enters your Salesforce CPQ system is of high quality. If your data contains incomplete, inaccurate and inconsistent records, they must be purged to ensure good data quality. This clean-up costs money, and you must factor it while determining the cost of implementing the Q2O management system.

Business Process Documentation

Make sure you define business rules clearly and document them in an effective manner to facilitate a seamless implementation of Salesforce CPQ. You must establish well-defined standards and document your pricing policy. Proper documentation of your business processes goes a long way in implementing them with high efficacy using Salesforce CPQ.

Impact on Existing System Configuration

You must identify and list the configurations and customizations that could affect your Salesforce ecosystem. Irrespective of whether you are implementing CPQ as part of a brand-new Salesforce deployment or adding it to an existing system, you should have a full sandbox set up for effective development and testing.

Replacement of the Legacy Solution

Most companies initially use simple tools such as MS-Excel to execute their quoting process, and later, embark on implementing powerful Q2O management software such as Salesforce CPQ. The complexity of your legacy quoting solution and the effort needed to replace it with Salesforce CPQ will have a direct bearing on the implementation of the latter.

Apart from the factors listed above, you should also consider another important aspect to determine the cost of implementing Salesforce CPQ – the time spent by your people on the implementation; they need to attend meetings pertaining to and take part in various phases of the implementation. Most organizations tend to ignore this critical aspect because they don’t evaluate the cost of their team spending time on a Salesforce (or for that matter, any software) implementation. But as we all know, time is money and precious time of your people is consumed by the implementation.

So far, we have seen the benefits of implementing Salesforce CPQ and looked at the various factors that determine the cost of implementing the novel solution. Let us now move on to examine the elements that constitute the total cost of ownership of Salesforce CPQ.

Elements of the Total Cost of Ownership of Salesforce CPQ

As with any Salesforce product, the total cost of ownership of Salesforce CPQ comprises of the following elements.

Base License Fee

The base license fee includes the cost of purchasing the license of a specific edition of Salesforce. Please note Salesforce CPQ is available in 4 editions. Given below is an example that explains how base license fee can calculated.

A vehicle engine manufacturer plans to go in for the CPQ Plus edition of Salesforce CPQ and has 50 users. For instance, if the monthly license fee of the edition per user is USD 150, the total base license fee to be paid by the automobile engine maker in a year will be as follows.

Price of the CPQ Edition (USD 150) * Number of months in a year (12) * Number of users of the product (50) = USD 90,000

The base license fee payable by the company for using Salesforce CPQ for one year is USD 90,000.

Note: Salesforce adopts a subscription-based pricing model that allows you to pay as you go. In some cases, a company may go in for multiple Salesforce CPQ instances for advanced development and data migration. Then, the additional instances will involve extra costs.

Disclaimer: The cost of Salesforce CPQ Plus indicated above is only for the purpose of illustrating the concept of base license fee. The actual cost of this and other editions of Salesforce CPQ may vary from time to time based on the license model opted for and discounts obtained.

License Fees of Add-on Software Tools

You might need to use various add-on applications to perform activities such as the following

  • Prevention of duplicate records
  • Database clean ups
  • Synchronization with Gmail
  • Integration of external databases

The license fees of these tools is another key component of the total cost of ownership of Salesforce CPQ.

Cost of Customizing Salesforce CPQ

Companies seldom prefer to use Salesforce CPQ as-is; they need to customize the solution to meet their specific needs, and this entails additional costs. For instance, one of our customers wanted to have two types of product bundles – one where only child products should show on the quote template, and the other where only the parent product should be displayed. Additionally, for the latter type, the price displayed should be the sum of all child products’ prices, including any applicable discounts. Fulfilling this requirement will have an impact on existing quotes and products.

We helped meet this requirement by customizing the quoting system to dynamically generate quote templates based on the type of product bundle selected. We also implemented a complex calculation logic and updated the quoting system to handle the impact on existing quotes. For quotes with bundled products created before this enhancement, the appropriate bundle type is assigned and reflected on the quote templates. Furthermore, we modified the product catalog management system to accommodate the bundle types and their associated pricing and discount calculations.

Expenditure Pertaining to Application Maintenance and Support

After fully configuring Salesforce CPQ, you need to ensure effective administration and maintenance of the Q2O management powerhouse. This includes management of users and data security, creation of page layouts, modifications to workflows from time to time, upgrades of the product and so on. The expenditure incurred on these activities is a vital element of the total cost of ownership of the Salesforce product.

As you can see, investment on Salesforce CPQ is highly beneficial and empowers you to sell more, rapidly. At Solunus, we help you ensure successful implementation of the solution and minimize the total cost of owning it. Our rich experience gained by helping companies of all sizes in diverse sectors make the best use of Salesforce CPQ and strong focus on comprehending your unique quoting needs allow us to make sure you get the highest ROI on the Q2O management platform.

Hope you liked this post. How do you use Salesforce CPQ to maximize your Q2O efficiencies? We’d love to know.

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About Solunus

Solunus is a leading Salesforce consulting company, based in Dallas, TX, USA. Our proven ‘needs-first’ approach coupled with our unrivaled expertise of the Salesforce platform enables us to provide the perfect solution to help you deliver delightful services to customers and achieve rapid growth.