08 23 Project Costs WEB

Navigating CPQ Project Costs: An Overview for Manufacturers

In today’s highly competitive and fast-paced world, manufacturers all over the globe have turned towards a CPQ or Configure Price Quote strategy. It enables companies to configure products, optimize pricing calculations, and accelerate quoting, all in a user-friendly online environment. While CPQ software helps companies grow, it also comes with a price tag that demands careful consideration. In this article, we are dissecting the various costs associated with CPQ projects. By understanding these costs, you’ll be able to make a more informed decision about leveraging CPQ to help your business grow.

Florian
August 31, 2023 geschrieben durch
Florian Merle

Time & Effort for Market Research

While it might not involve direct monetary expenses, doing market research to find which CPQ solution will best fit your needs does require a significant amount of time and effort. It involves an in-depth assessment of the CPQ market, comparing features, pricing, and vendors, and evaluating their compatibility with your processes and business goals. It is a time-consuming task that is essential to ensure that the CPQ you choose aligns with your needs. The time and effort spent on market research is therefore a crucial investment.

Upfront costs

One of the primary costs in a CPQ project is the acquisition of software licenses or the purchase of a CPQ system. This investment varies based on the complexity of your manufacturing processes, the size of your organization, and the chosen CPQ vendor. You’ll typically encounter license fees, calculated per user or on a subscription basis. While monthly billing allows for quick adjustments of fees and options, yearly billing generally enables service packages and discounts. Make sure to check all pricing options from your CPQ vendor to guarantee that your package suits your business model.

Customization and integration costs

While CPQ software offers powerful capabilities, companies often want to customize it to align seamlessly with their unique business processes. These customization expenses entail everything from adapting the UI to matching your specific workflow to integrations. The latter describes the action of connecting the CPQ solution to your existing software infrastructure, such as ERP and CRM systems. Building integrations is crucial to fully automate the order process. Both customization and integration are essential investments to maximize the value of your CPQ.

Training and support costs

After the implementation of a CPQ system, your workforce and your distributors need to become proficient in using it efficiently. This means you will need some budget for training programs and materials to ensure a smooth transition. Some vendors offer free training during project implementation, while others may charge additional fees. Make sure to account for ongoing support costs, covering technical assistance and troubleshooting to keep the CPQ system running optimally.

While these costs may seem like ongoing expenses, they are investments in ensuring that your team and your distributors can leverage CPQ technology. This will ultimately result in improved accuracy, faster quoting, and increased sales!

Maintenance and update costs

Maintenance and update costs are essential for keeping your CPQ software current and optimized. These expenses typically include bug fixes, monitoring, performance improvements, data security enhancements, and backups. Neglecting this can lead to system inefficiencies, security vulnerabilities, and potential disruptions. Make sure to check whether these costs are already included in the CPQ license fee or if they occur as additional costs.

Long-term costs

When considering the long-term costs of CPQ, it’s important to assess not only the initial investment(s) but also the recurring expenses that accumulate over time. This includes annual license renewal fees for example, but also considers the potential for price increases in the future. While CPQ can yield substantial benefits, it’s crucial to ensure that your budget accounts for these long-term costs to make informed decisions.

Return on Investment (ROI) of implementing CPQ

With all these expenses in a CPQ project, when can you expect to see a Return on Investment or ROI? The speed at which you can win your money back is often remarkable. While CPQ does entail different costs, the efficiency gain it brings can quickly recoup these expenses. By automating complex configuration and pricing tasks, CPQ dramatically reduces the time required to generate accurate quote. This will in turn accelerate sales and minimize costly errors.

CPQ also empowers your sales team to identify upsell and cross-sell opportunities, resulting in increased revenue. Fast and error-free quotes will improve the customer experience, leading to customer retention and referrals, further boosting revenue.

In many cases, businesses experience a rapid ROI with CPQ, often within the first year of implementation.

Are you curious to know when you could count on a ROI with CPQ? Learn here how to make a business case.

Conclusion

CPQ or Configure Price Quote is a powerful tool that helps manufacturers accelerate their sales, by increasing accuracy and automating the quotation process. But engaging in a CPQ project comes with its own price tag, varying based on the complexity of your processes, the size of your company, and the chosen CPQ vendor. In this blog post, we have navigated through all the possible costs that you can expect from a CPQ project, from upfront expenses like software licenses to ongoing commitments in the form of training, maintenance, and support.

Yet, these costs aren’t just expenses; they’re investments. Because with the right approach, CPQ can be the strategic commitment you need to drive efficiency, boost revenue, and improve your customer experiences.

Want to know what the investments and ROI in your CPQ project will look like?

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