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Salesforce CPQ for Subscription-based Businesses

By |2024-04-22T10:19:05+00:00April 22nd, 2024|

In today’s fast-paced business world, subscription-based models are becoming increasingly popular across a wide range of industries, from software as a service (SaaS) to media and entertainment. This shift towards recurring revenue models has necessitated a change in how businesses approach their sales and customer management processes.

Enter Salesforce CPQ (Configure, Price, Quote) — a powerful tool designed to streamline these processes, making it an indispensable asset for subscription-based businesses. This blog post will delve into the transformative impact Salesforce CPQ can have on such businesses, offering insights into how it can optimize sales processes, enhance customer experiences, and drive growth. From automating complex pricing calculations to facilitating smoother renewal processes, we will explore the myriad ways in which Salesforce CPQ is revolutionizing the way subscription-based businesses operate, ensuring they remain competitive in an ever-evolving market landscape.

CPQ for Subscription-based Businesses

Salesforce CPQ is a critical tool for businesses utilizing a subscription model, enabling them to efficiently manage the sales process from configuration to quoting. It allows sales teams to quickly generate accurate, personalized quotes for subscriptions, considering various pricing and discount options. This not only boosts sales efficiency but also improves customer satisfaction by providing clear and tailored proposals. Furthermore, Salesforce CPQ’s integration with the Salesforce ecosystem streamlines operations across departments, ensuring a seamless customer journey from acquisition through renewal. For subscription-based companies, Salesforce CPQ is essential for optimizing sales processes and driving growth.

Key Benefits of using CPQ

  • Streamlined Sales Process: Automates and simplifies the creation of accurate quotes, reducing manual errors and saving time.
  • Customizable Subscription Models: Offers flexibility in setting subscription terms and pricing, including monthly, quarterly, or annual options, to meet diverse customer needs.
  • Dynamic Pricing Strategy: Supports various pricing models such as flat-rate, tiered, and usage-based, allowing for tailored financial arrangements.
  • Enhanced Pricing Flexibility: Price dimensions enable customization over time, allowing for price adjustments, discounts, and promotional offers across subscription periods.
  • Efficient Quote to Contract Conversion: Facilitates a smooth transition from quote creation to order and contract generation, streamlining the sales cycle.
  • Automated Renewals and Amendments: Simplifies the renewal process and contract modifications, ensuring continuous service and updated agreements.
  • Improved Customer Experience: Delivers personalized and accurate quotes quickly, enhancing customer satisfaction and retention.

Implementing CPQ Solutions for Subscription-Based Businesses

Imagine your business has a groundbreaking product ready to transform the market through subscription sales. Harnessing the power of Salesforce CPQ can catapult your sales efficiency to new heights. This guide walks you through the essential steps to turn your product into a subscription powerhouse, seamlessly integrating with CPQ to enhance customer experience and drive growth.

    1. Setting the Foundation: Installing Salesforce CPQ
      • Installation Overview: Salesforce Install Salesforce CPQ from the AppExchange, choosing between a sandbox for safe testing or your production environment for immediate use. A sandbox is ideal for exploring CPQ features risk-free.
      • Configuration Essentials: After installation, Salesforce CPQ requires initial setup to tailor the solution to your business’s unique needs. This includes defining product rules, pricing strategies, and quote templates that align with your subscription model.

      During configuration, it is essential to define your organization’s Subscription Term Unit within Salesforce CPQ. This setting is pivotal as it establishes the default duration for your subscriptions, such as monthly or daily. By setting your package’s subscription term to a specific unit, like monthly, you create a foundational measurement for all subscription durations.

  1. Tailoring CPQ for Your Subscription Product and pricing
    Tailoring Salesforce CPQ to accommodate your subscription product is pivotal in harnessing the full potential of the platform. Here is how to customize CPQ for your subscription offerings:

    • Creating a Product Record: Start by establishing a product record within Salesforce CPQ. Ensure all relevant information that defines your product is accurately captured, setting the stage for a seamless subscription setup.
    • Configuring Product for Subscription: With your product record in place, the next step involves tailoring the product to fit your subscription model. This includes configuring attributes like subscription terms, subscription pricing.
      • Subscription Term: Defines the standard duration for a product’s subscription which can be overridden. For a quarterly subscription, enter “3”; for an annual subscription, input “12”. These numbers correspond to the subscription term unit option selected in the package. If you have chosen days as the unit, then for quarterly subscription, enter “90”; for an annual subscription, input “365”.
      • Subscription Pricing: This is the pricing strategy applied to your subscription. Pricing can vary, some subscriptions may have a fixed price, while others might use dynamic pricing models. For instance, you might charge different rates for products bundled with a warranty, applying higher prices to more expensive products and lower prices to less expensive ones to reflect the value and cost of the warranty coverage appropriately.

      • Setting the Pricing: Finally, determine and set your product’s pricing strategy within CPQ. Subscription pricing can be intricate, involving various models such as flat-rate, tiered, usage-based, or a combination thereof. Salesforce CPQ allows for the configuration of these pricing models directly within the product record.

      To initiate, establish a standard price book record to capture your product’s list price. This is achieved by navigating to the product’s related tab and selecting the “Add Standard Price” option within the price books related section.

      Additionally, for enhanced pricing flexibility, consider implementing price dimensions. This powerful feature enables price customization over time, accommodating adjustments like discounts or price increases across different periods of a subscription. For instance, if a subscription spans four years, price dimensions allow you to modify the price for each year according to strategic pricing plans or promotional offers. This level of customization ensures pricing strategies can be dynamically adapted to suit business objectives, customer engagement tactics and make you sales effective.

      This is achieved by navigating to the product’s related tab and selecting the “New” option within the price Dimension related section. And then Choose type as year or according to your specific subscription term.

      Additionally, you can establish rules for discounts, promotional offers, and other pricing adjustments that might apply throughout the customer lifecycle. This flexibility ensures that your pricing strategy not only supports your business goals but also adapts to market demands and customer expectations.

  2. Creating Quote and add Subscription ProductsTo begin, create a quote on the customer account record. Fill in all the necessary details and then click on the ‘Edit Line’ button to add products to the quote.Next, locate the ‘Add Products’ button and select your subscription product from the available options. The CPQ application will automatically calculate the price based on your standard pricing.


    If you have created price dimensions, you can also edit each term accordingly. And you can simply switch between the terms using the ‘Desegment’ and ‘Resegment’ buttons (marked with red circle) located at the end of the item line.Make any necessary adjustments to the subscription terms based on the customer’s commitment level. Once everything looks good, click ‘Save’ to finalize the quote with the added subscription products.

  3. create order and Contracts
    Once you have saved the quote and ensured that all your products are ready in the line item, you can click ‘Edit’ on the quote object and check the ‘Ordered’ field. CPQ will automatically create an order for that quote.Navigate to the order record from the related tab on the quote.Activate the order and then proceed to edit the order record, checking the ‘Contracted’ field on the order object.CPQ will automatically generate a contract record and link it to the account.
  4. Renewing opportunity and Modifying contracts
    • Renewing Opportunities
      After creating the contract, you can edit it and check the ‘Renewal Forecast’ field. This field will automatically create an opportunity, helping your sales team make faster sales and predict upcoming revenues.
    • Replacing Products with Another
      If you need to make changes to your contract after a certain duration from its creation, CPQ can assist you. Whether it is modifying quantity, price, offering discounts, or replacing a product with another, CPQ has you covered.

      • Enter the date of change in the ‘Amendment Start Date’ field, indicating when you want the changes to take effect. Then, click on the ‘Amend’ button.
      • This action will generate a new quote record where you can make the necessary changes. The modifications will only apply from the Amendment Start Date to the contract end date. CPQ will automatically calculate all changes for the net price, streamlining your sales process.
      • Once you have saved the quote and created an order by updating the ‘Ordered’ field on the quote and after activating the order, check the ‘Contracted’ field on order. You will find that the changes are reflected in the original contract. CPQ does not create two contracts.
  5. Billing against your contract and orders.While Salesforce CPQ optimizes the order and quote creation, use Salesforce Billing to manage financial aspects, streamlining your sales cycle and enhancing revenue tracking.This guide aims to simplify Salesforce CPQ’s subscription management, from setup to billing, ensuring your sales processes are as efficient and effective as possible.

Limitations of using Salesforce CPQ

Certainly! While Salesforce CPQ offers numerous benefits for subscription-based businesses, like any platform, it also comes with certain limitations. Here are some notable limitations of Salesforce CPQ:

Learning Curve: Salesforce CPQ can be complex and may require considerable time and resources for teams to become proficient, potentially delaying initial implementation benefits.

Customization Complexity: Advanced customization within Salesforce CPQ may require deep technical knowledge or assistance from Salesforce experts, which can add to the cost and time of deployment.• Cost: For small businesses or startups, the cost of Salesforce CPQ, especially when adding advanced features or requiring extensive customization, may be a significant consideration.

Integration Challenges: While Salesforce CPQ integrates well within the Salesforce ecosystem, integrating with external systems or legacy software can sometimes be challenging and may require additional tools or custom development.

Limited Support for Extremely Unique Business Models: While highly customizable, there may be extremely niche or unique business models that Salesforce CPQ cannot accommodate without significant custom development.

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