Part 2: Why 80% of businesses need a Subscription, Price, Quote (SPQ) and 20% of businesses need a Configure, Price, Quote (CPQ). Do you know the difference and how to reduce cost and time to implement?
LinkedIn Poll Feed back SPQ vs. CPQ
When we think about a software company, the quoting process is more straightforward. A Sales rep selects different software versions. They may need to add in different seats or licenses. They will need hours to implement the solution and add on different support levels (silver, gold, platinum). There is no complexity when you think about a software company because the software does not need a (BOM) and is not (BTO) or configured. Most software is a pre-packaged solution with a few different versions that can be upgraded or downgraded. You tend to add on seats or licenses, or you may reduce those seats or licenses. You might add different support levels based on the support needed or take support off because you have an entire team to support your software or implementation. The process related to Quoting for a software company is called product selection which connects to a subscription.
Now, let's break down SPQ - starting with S for Subscription
A subscription is a time-based contract that ties you to your service provider for a specified amount of time. When your contract expires, so does your service, which usually bills ongoing or recurring. Subscription typically consists of three elements: 1) a support and maintenance agreement; 2) the authorization to download and use the specific software application during the term of that agreement; and 3) the right to continue product upgrades or downgrades during the agreement. So, when we think about a software company, there is zero complexity which means you do not need a configurator.
P is for Pricing
There is traditionaly less complexity because you are only dealing with different Pricing based on various software versions. You might need to leverage different tiers or ramps based on the software, seats, or licenses you plan to use. Implementing the solution will take a certain number of people billed by the hour. Last you may add support that may have different levels charged based on a percentage of the overall deal size or based on a fixed fee. The reality is your company may never need to use attributes to drive your Pricing.
Last but not least, Q is for Quoting
Basically, quoting for Quotes. Unlike a Bill of Materials, a software company typically has only a few line items on a quote based on the software version, seats or licenses, hours to implement, and the support cost to maintain the software for upgrades. Traditionally, this Quote is only a handful of pages presented in a simple Word or PDF document and sent to the customers for eSignature.
To conclude this blog, if you are looking for your next quoting solution or plan to, ask yourself, am I super complex where I need a CPQ, or am I more straightforward where I only need an SPQ. Purchasing an SPQ will allow you to work within your budget, and your implementation should be as short as a few days to a couple of months. Compared to a CPQ which is very expensive and will take you anywhere from 6 to 36 months depending on your complexity.
So, what quoting solution is right for your business?
CPQ or SPQ?