“I think there's a big rise in demand. I think that to make your product more attractive we had to get more complex and customized. We had to add products. We had to change them and how they're connected to make your offer stand out from your competition.” - Jeremy Steinbring
There is a lot of community trauma around CPQ and it stems from one or more of multiple sources:
It’s a lot! And the angst is always compounded by the fact that the longer you wait, the harder it is to fix it.
As companies make acquisitions and sprint to consolidate features into a single offering, they develop more complex pricing models that bend to user demands. The CPQ ends up being complicated and confusing – but is absolutely necessary.
Jump to the clip to listen in as Mark gives a quick rundown of the current state of affairs and Jeremy explains how it’s impacting CPQ buyers
“I see a world where you have your proprietary product that your customers use. That information is automatically sent into the CPQ module, which then creates invoices and billing, and it's all automated. You don't need a human to intervene.” - Jeremy Steinbring
A lot of trends have been pushed onto SaaS executives from the boardroom. For example, a lot of investors pushed their portfolio companies to adopt product-led growth models and subscription-based pricing.
What these companies quickly learned was that product-led growth isn’t a great fit for every product, particularly complex products with an onboarding lifecycle. Operators discovered how ill-prepared their product teams were to monitor usage, let alone automate billing for usage.
This doesn’t mean that buyers will stop expecting companies to adapt and offer these pricing models. We may see a future with billing models yet to be dreamed up. Mark highlights some industry changes, saying, “There was a really interesting blog post by Sequoia about ‘Service-as-a-Software.’ In this new AI world, products will be priced based on outcomes rather than anything else.
This increasingly complicated nature of pricing, even for early-stage companies with sophisticated products, will require companies to adopt CPQ solutions earlier rather than later.
Jump to the clip to hear Jeremy and Mark debate about what the future of billing in SaaS will look like
“The needs of people in SaaS, when it comes to quote-to-cash, are probably quite different than that of manufacturing companies from 20 years ago. That speaks a lot to the challenges that people have with CPQ.” Mark Lerner
CPQ was originally designed for manufacturing companies. There were complex SKUs with sub-components that needed to be tracked, but the concept of subscription-based pricing didn’t really apply.
The companies that managed contracts and purchasing for these manufacturing companies were purchased by large software companies (Salesforce purchased Steelbrick and Oracle purchased BigMachines, two of many examples) and repositioned for a B2B SaaS market without major infrastructure or data model changes.
Modern day CPQ solutions must be reimagined to help companies manage automatic renewals and structure the data in a way that makes revenue recognition easy.
Jump to the clip for a rundown on the history of CPQ solutions and how many potholes exist for founders who avoid the cost of implementing a solution early
“It's probably time because you're feeling the pain enough to ask yourself that question.” Jeremy Steinbring
Mark and Jeremy disagree on when companies actually need a CPQ. Mark says that you should implement a CPQ when you begin automating processes and have reliable data. For startups that are focused on reaching their first million dollars, a CPQ isn’t important. When companies move from SMB to mid-market, they should be looking at a better way to automate their billing processes.
Jeremy says that, if you’re selling subscription-based products, you need a CPQ almost out of the gate. When you subsidize the right systems with the right people, your sellers can focus on selling.
Jump to the clip for a horror story on how avoiding a CPQ solution resulted in ripping and replacing a Salesforce instance.
“If it's not working for you and you feel like you bashed your head against the wall one too many times, maybe it's time to make a change.” - Mark Lerner
There are a few core requirements that you need to be able to do in a CPQ in order to scale and handle all these changes we’ve talked about in this webinar:
Jump to the clip to hear about how common two-year implementations are with legacy solutions
You know you need a CPQ for your fast-growing business, but buying one can be very overwhelming. DealHub is here to help. Check out their buyer checklist for CPQ vendor selection.
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