Ep72: How a Configure Price Quote (CPQ) Solution Can Give You the ‘Winning’ Price with Steve Wilkins
Steve Wilkins is the Head of Pricing Solutions at Standav Corp He’s a seasoned executive with many years’ experience advising senior management teams on various areas, including:
- Revenue growth
- New business model development
- Pricing strategy
- Data preparation and cleaning
- Price and revenue management
- Commercial excellence
- Change management
- Profitability improvement
- Business transformation.
In this episode, Steve talks about his experience working with pricing-focused CPQ companies, how CPQ helps in bundling products together, how pricing optimization is attained with the use of CPQ, and much more.
Why you have to check out today’s podcast:
- Learn about what a CPQ is and the value it gives to a company
- Find out how to bundle products together to cater to a customer’s specific needs
- Learn how to achieve price optimization through the use of CPQ
“Pricing is a journey, it’s not a sprint. So take it in steps. Don’t think that you have to go for that end-goal right away.”
– Steve Wilkins
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01:37 – Dealing with a lawsuit is the last thing you want to have. But interestingly, it’s how Steve started his pricing career.
03:06 – What is a CPQ and what is a pricing system? How do they differ from each other?
03:55 – What does a configured product look like? Steve gives an example.
05:26 – Manufacturers with customizable products can use CPQ. How can they bundle products?
06:28 – What is so important about CPQ systems? What benefit do you get for buying a CPQ system for your company?
08:12 – What about time to quote? What big of a deal is it about?
11:56 – Pricing systems consider different factors, and when you add this to different configurations of products it gets complicated. Let’s hear Steve’s thoughts about it.
13:13 – What is Standav and what does it do? What differentiates it from other implementer companies?
14:23 – Data cleaning is one of the tools Standav offers. What goes on in this process?
15:18 – Dealing with master data management. How does Standav solve the problem of bad data?
“With CPQ you’re providing a single source for putting multiple things together.” – Steve Wilkins
“Right now they all integrate into a CPQ to provide the more relevant price or winning price that’s going to help speed the process up. So that’s where you’re going to hear that story of, I can get this through quicker, win more deals at the best price. – Steve Wilkins
“I believe in the idea of getting the data ready, fixing the problem that caused the data to be bad, and then building that integration into it. It is a pricing system, a CPQ system, a CRM system – we build that.” – Steve Wilkins
People and Resources Mentioned:
Connect with Steve Wilkins:
- E: firstname.lastname@example.org
Connect with Mark Stiving:
Full Interview Transcript
(Note: This transcript was created using Temi, an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Steve Wilkins : Pricing is a journey. It’s not a sprint. So take it in steps. Don’t think that you have to go for that end-goal right away. Just go through it with small steps at a time, show those wins that reinforce in management that you can keep doing it and it’ll help you keep growing because the industry is evolving and keeps evolving. There’s always something you can do to improve the long-term.
Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the systematic relationship between them. I’m Mark Stiving. Today, our guest is Steve Wilkins. Here are three things you want to know about Steve before we start: he’s worked at Pros as a strategic business consultant. He’s had his own business, a pricing consultancy since 2012. And he’s been in pricing for over 30 years. And I’m embarrassed to say that’s longer than I’ve been in pricing. So welcome, Steve.
Steve Wilkins: Thank you.
Mark Stiving: So Steve came really highly recommended to me by Frank Sohn; he’s the host of the CPQ podcast. And Frank tells me that Steve knows everything there is to know about every CPQ and pricing system in the world. Is that true, Steve?
Steve Wilkins: I don’t know about every one of them. I know quite a few.
Mark Stiving: Okay, good. Now, let’s start with this: how’d you get into pricing 30 plus years ago?
Steve Wilkins: Interesting story. I actually got into pricing as a result of a lawsuit. So the company I was working for, got sued, they had shipped inventory to one of their distributors and billed it to the wrong one – the guy across the street – and their pricing was way different for similar products with different brand names on them. And an end to the lawsuit they had to pay 10 years difference of how much the gentleman would have made, had he been priced like the other guy. And we had six months to create a pricing department inside of the company. So my office sat between the CEOs and the legal team. And for six months, I worked and learned all of the gray areas of the law, and how we could then go back six months later to the courts and show how we were fixing what we were doing wrong.
Mark Stiving: Okay, that’s the least fun pricing intern story I’ve ever heard.
Steve Wilkins: Yeah, we’ll just say it wasn’t fun. It was a great way to understand pricing, learn all the things you couldn’t and could do, from them doing it wrong before having a pricing function in the company because sales control that before that.
Mark Stiving: Yeah, yeah. So let’s jump into the topic that I really want to talk about today. And that is CPQ and pricing systems. So the first question, probably a big question and go ahead and pontificate for a minute. What is CPQ? What is a pricing system? And how are they different?
Steve Wilkins: So you think of CPQ as configure, price, and quote, and what that starts out with, you get to configure a product. So your ERP systems can do that. And you get the price in the middle. Your ERP systems have a cost-plus in most cases, and then the Q, you’re going to quote it. In the past, you did that inside of your ERP and then you send it out in an Excel or some Word document. That started, I would say, eight years ago, roughly, where you started hearing the CPQ term. And the companies started popping up where they started creating configure price quote as a tool to put inside or attached to your ERP system.
Mark Stiving: Yeah, let me pause you for just a second. When you say configure a product can you just give us an example so everybody understands what we’re talking about?
Steve Wilkins: Sure. So I’ll give you one that they use quite a bit. So a pontoon boat. So on a pontoon boat, you’ve got those floating devices on the bottom, you get the base that sits on the chairs that are in it, what size engine that goes into it. Each one of those could be different. So you can have, you know, larger or smaller floating devices, you can have different horsepower engines that go with it. You can have different seats with different colors, different flooring that goes in it. Each one of those is options that can configure up to generate an overall product. And then they want to generate the price that goes with that. So some companies configure that price that goes with that based on the cost of each component. And then they add an adder, the best way to describe it, and then you come up with a price.
Mark Stiving: Got it. And so you and I are old enough that we remember you used to buy a car that way.
Steve Wilkins: Correct. Use video, you didn’t just go in and find one on the showroom floor and you bought it you actually pick what it was. It’s no different than a Dell computer. It used to be the big thing. You wanted to pick your computer for the home you would go onto their website and say ‘Yeah, here’s the resolution, here’s a memory, you know, all the way down to what type of mouse, what type of keyboard you wanted. And that’s all configuration.
Mark Stiving: Okay, so now that sounds like it makes a lot of sense for a manufacturer who has customizable products and a process where they can go customize a product. It seems that we also use CPQ configurations when I’m going to bundle a bunch of things together in different volumes. And…
Steve Wilkins: Yeah, so if you think of it, there are many ways of configuring it, even services that somebody is going to offer bundling of products or service or the combination of the two. And it started as the prior one that I said of products in the CPQ industry has morphed into, how do we help configure stuff for everybody? How do we bundle stuff? So you may have several products that you’re putting together to create a bundle. And then in this industry, you might put some services with it. So if you think you’re bundling some components of a drive for a pump, and you’re selling this out into the field and you’re creating a service package that goes with that where you’re monitoring it, those all get bundled together as part of an overall sales as part of the quote.
Mark Stiving: Okay, and why are CPQ systems so important? What’s the big value? You know, if I go buy a CPQ system for my billion-dollar manufacturing company, what benefit do I get out of that?
Steve Wilkins: You’re providing a single source for putting multiple things together. So the ERP can give you each product and the ERP can put together the configuration of a product, you can put the bundles together into a quote, it can then price it from a different part. The quoting is usually done outside of it. Some of them are now putting coding into their ERP systems, but this puts one source for all that goes together. And then it sits on your CRM system. So your salesforce platform, your Microsoft Dynamics platform, the two main ones that you’re going to have your quoting system sit on. And it then is the place for your salespeople to go into configuring a product or a system to price it, to generate the quote and to send it out, but it gives one spot to try and do everything. Whereas when they were inside of the ERP systems, they could not go in and do it all, they would have to go into a team to quote stuff, because usually, the outside salesforce did not have access to ERP because of the cost of licenses to go in and do all of that.
Mark Stiving: Yeah, okay. So that makes sense. And it seems the two that I just heard you describe, the two big benefits I just heard you describe, it’s probably more efficient. So I’m using less of my employees’ time to do it. It’s probably more accurate because I have a single source instead of multiple different sources. And then the one that I’ve heard from, actually, I’ve heard this from PROS first, but I hear it a lot now. And that is the time to quote, is like a really big deal.
Steve Wilkins: So time to quote and approval, and the reason for PROS are the pricing systems putting that into it is that they have the approval engine for the pricing as well. So not only are they looking at that, you get the quote done quickly but to have an accurate price with it (too). So a price that will win, because if you can quote something but you have a price that’s not a winning price, you still have cycles of it. So the quicker you can have an accurate quote on what they’re looking for, and a price that’s going to win – you don’t want to be having it too low.
You don’t want to have it too high. So that’s the intersection – whereas we talked to the beginning here, CPQ the C, the P, and the Q and then CpQ companies it’s a big c small p big q, p is small and they’re because they’re using a cost-plus usually a spreadsheet in the background. Now the pricing companies, the Davos, Pros, Zilliant, Price f(x), Main Four out there right now they all integrate into a CPQ to provide the more relevant price or winning price that’s going to help speed the process up. So that’s where you’re going to hear that story of, I can get this through quicker, win more deals at the best price.
Mark Stiving: Okay, so can I say thank you very much for saying those words big C little p big Q. That just made all the sense in the world as I try to separate what is a CPQ system do differently than a pricing system.
I love teaching pricing and value, but I get a little frustrated. It’s hard to implement what you’ve learned after just one class. There are nuances to what you learn in a classroom that are just not easy to recall when trying to implement them in your real-world on a project. To most, pricing feels so risky.
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I find pricing a ton of fun. You might too if it wasn’t so scary. If a little guidance, expert counsel and sound advice would be of benefit on your next pricing initiative, please reach out to me at email@example.com. We only have room for a few more companies.
Mark Stiving: So the pricing systems are always always, most often they’re trying to optimize the right price. They’re using pricing science, they’re doing market segmentation to figure out what bucket a single customer fits in and what price I should be giving that customer. And then I guess when you add that to different configurations of products, it starts to get really complicated.
Steve Wilkins: It does and if you think the difference in that and if you can picture what a quote looks like that you’re doing multiple things or bundles, you’re doing a quoted a line item, but you’re also looking at the overall quote. And so how relevant is that pulling in your terms and conditions of that quote, that’s also part of what you’re doing in the pricing engine combining in with the CPQ.
So making sure that you have, what your terms are, how long it’s going to take to produce this when it gets out. All those background information pieces. That’s all part of the analytics that go into creating the optimal quote; because if you think of, you’re building a product and you’re trying to turn around a quote, one thing that I did when I was at PROS, other companies are now starting to do it, instead of the CPQ, you’re taking back to the ERP system to generate availability of that product. So not only are you giving them a pool, you’re really truly telling them how soon they can get that product out. So (it provides) additional benefits to that overall quote.
Mark Stiving: Right. Cool. So tell me – I’m really curious about what is, how do you pronounce, Standav?
Steve Wilkins: Standav is an SI partner. So they’re an implementation company. And they are a big partner with Salesforce, Apttus, that those are the main two that they do implementations for. There’s a couple of smaller companies in there, those are the main ones. I joined the beginning of this year to help them expand that out into the pricing arena. As we see, Salesforce has a CPQ, so Salesforce CPQ as well as an app to CPQ, to add in the pricing side into those companies. So how do we partner with them to implement one of the four major players that are out there? And then we also brought in what I had in my practice of helping people get ready for software because I look at it as a people process, then, technology. So make sure you got the (right) people in place, you have your processes in place, then you put the technology in place. If you don’t, the technology usually lasts two to three years and the people find a way around it.
Mark Stiving: Yeah, the other thing, and maybe it’s included in one of those three, when I implemented one of these systems, I found the data was not clean, it was really hard, you had to get that ready. And I’m not sure that fits into people or processes for us. But boy, that was a mess.
Steve Wilkins: It is a part process. And that is actually one of the tools that Standav offers, is data cleaning Data Prep. So we actually do the data cleaning, the data prep and build the integration into whatever system that you’re going to be implementing. So there are a couple of different people that do that out there for data cleaning and prep. They get your data ready, they don’t do any of the integration. And the part that I believe is also a differentiator for Standav is that we also do the fixing up process because once you clean the data, and if you just clean it, you’re going to do the same thing again.
You’re just taking a snapshot. I believe in the idea of getting the data ready, fixing the problem that caused the data to be bad. And then building that integration into, is it a pricing system, a CPQ system, a CRM system? We build that. So you can go directly into those as well. So you’re not just getting part of it, we’re kind of providing the whole solution for them.
Mark Stiving: Yeah, so this is fascinating. But I love it when I can put pieces together in my mind. This is so neat. And so when we implemented our, it was actually, I guess you could call it a CPQ, but we thought of it as a pricing system or quoting system. The biggest problem we had was master data management. Right? It was ‘company name is IBM spelled IBM I dot B dot M dot International Business Machines’. How the heck do you spell this making them all recognize that’s all the same company. That’s got to be the biggest problem we dealt with. And what’s really cool is companies implementing CRM should have to deal with that problem, too. So if you’re implementing Salesforce, you just solve the problem.
Steve Wilkins: Yeah. And the interesting part of that is a lot of people putting that in, believe they can internally do that. And so they do a one-time fix. And they’ll go through their data, and they’ll look at IBM and all versions of it, and they will fix it. But they didn’t fix what caused that IBM to be put in, you know, you’ve got to have the process in place so that it doesn’t do that again. And so they then have a master data mess two years later because they did it – not with MSC or, you know, some other one. And so, we’re trying to go to these companies that say, while you’re getting ready to implement one of the CRM, a CPQ use pricing systems. Data is your biggest challenge, in effect most sales cycles when I was at PROS, the reason somebody didn’t buy was data cleanliness. And so that’s one of the big things I started pushing for Standav is, you guys are already doing this, you’re just doing it as part of an implementation, you don’t even realize the value of it. People need to understand that there aren’t many people that do this well, they usually try and do it themselves and it’s not successful long-term.
Mark Stiving: Yeah. And the hard part, maybe there’s a different answer. But in my mind when I was thinking through this whole process, the only real answer was, I can’t let people enter new customers, which just slows down the process.
Steve Wilkins: Yeah, you still need to allow them to enter new customers, it’s just you have to have rules behind the way they are entering them. It’s not free text. You have to have a form that they put it in under. And you know, as a first-name-last-last-name-first, oh, all those kinds of rules that go in, what industry are they in? And from that, it rolls into a methodology that can be repeated, so that you don’t put the same company and so it also tracks when you’re entering a company. Is that already in the system, by answering the questions.
Mark Stiving: Yeah, that’s the hard part. That’s the hard part. All right, Steve, this has just been a blast. I got to end this with my all-time question. What’s one piece of pricing advice you would give our listeners that you think would have a big impact on their business?
Steve Wilkins: The biggest thing I would say is pricing is a journey. It’s not a sprint. So take it in steps. Don’t think that you have to go for the end-goal right away. Just go through it small steps at a time, show those wins, that reinforces through management that you can keep doing it, and it’ll help you keep growing because the industry is evolving and keeps evolving. There’s always something you can do to improve the long-term, but make it in small steps.
Mark Stiving: Yeah, I think that’s brilliant. I want to say what you just said in slightly different words and maybe a slightly different frame. I always tell people value-based pricing, the most important thing you could possibly do is adopt value-based pricing. But it’s impossible to do it right. It’s impossible to be perfect because you can’t read somebody’s mind but you can always get closer and better. And so just think of it as, how do I get better today than I was yesterday?
Steve Wilkins: Yep. So it’s an ongoing battle.
Mark Stiving: Steve, this has been an absolute blast. If anybody wants to reach you, how do they find you?
Steve Wilkins: So you could reach me out on LinkedIn or at Standav, which is Steven.Wilkins@standav.com.
Mark Stiving: Excellent. All right, Episode 72 is all done. My favorite part of today’s podcast? I think the big aha I had today was a big C little p big Q. I thought that was really good. What was your favorite part? Please let us know in the comments of wherever you download and listen to the podcast. While you’re at it, would you please give us a five-star review? We take these seriously and they’re hugely valuable to us. Don’t forget we have a free community where we publish all of the content that we put out. You’ll find that at community.championsofvalue.com. If you have any questions or comments about this product, or about pricing in general, feel free to email me firstname.lastname@example.org. Now, go make an impact!
Mark is a pricing expert who helps companies understand value, how to create it, communicate it and capture it. He has a PhD from U.C. Berkeley and an MBA from Santa Clara University, plus 25+ years pricing experience. As an educator, speaker and coach, Mark applies innovative, value-based pricing strategies to guide growth and increase profits for large and small companies.