Salesforce CPQ (Configure, Price, Quote) offers various pricing methods to accommodate complex business requirements and ensure accurate quoting. Each pricing model caters to different use cases, allowing flexibility in sales operations. Below is a comprehensive guide to the primary pricing methods available in Salesforce CPQ, with detailed steps and use cases for each method.
Salesforce CPQ Pricing Methods
1. List Pricing
List Pricing is the default method in Salesforce CPQ, where the product’s price is directly derived from the price book entry. It’s ideal when no customizations or special pricing adjustments are necessary.
Configuration Steps:
- Create a new product and set the “Pricing Method” to “List.”
- Assign the desired list price within the product’s Price Book.
Example Use Case:
A company selling a standardized product, such as a software license, at a fixed price across all customers.
2. Cost Plus Markup Pricing
Cost Plus Markup Pricing sets product prices based on the cost of goods sold (COGS) plus a markup percentage, ensuring a consistent profit margin.
Configuration Steps:
- Create a new product and set the “Pricing Method” to “Cost.”
- Enter the unit cost under the “Cost” related list.
- Define the desired markup percentage to calculate the final price.
Example Use Case:
A manufacturer producing custom machinery where variable costs need to be covered and a profit margin maintained.
3. Block Pricing
Block Pricing is used when products are sold in specific quantity blocks, each with a fixed price, making it ideal for bulk sales.
Configuration Steps:
- Set the product’s “Pricing Method” to “Block.”
- Define the quantity ranges and associated prices within the “Block Prices” related list.
Example Use Case:
A supplier offering discounted rates for bulk orders, such as $100 each for 1-10 units and $90 each for 11-20 units.
4. Percent of Total Pricing
Percent of Total Pricing calculates a product’s price as a percentage of the total price of selected products in a quote, making it useful for add-on services.
Configuration Steps:
- Set the “Pricing Method” to “Percent Of Total.”
- Specify the percentage value and determine which products contribute to the total base.
Example Use Case:
An installation fee set at 10% of the total equipment cost in a project quote.
5. Contracted Pricing
Contracted Pricing is for setting specific prices for products for individual customers as part of a negotiated agreement, ensuring consistent preferred customer pricing.
Configuration Steps:
- Create a contracted price record linked to the customer’s account.
- Define the product and set the special price for that customer.
Example Use Case:
A software company offering a discounted rate to a long-term client, with this rate consistently applied across future quotes.
6. Option Pricing Within Bundles
Option Pricing allows pricing individual options within product bundles, providing flexibility for configurable products.
Configuration Steps:
- Create a bundle product and add individual product options.
- Set each option’s pricing method (e.g., fixed price or percent of parent).
Example Use Case:
A computer retailer offering customizable PCs where components like RAM or storage can be selected at individual prices.
7. Batch Pricing
Batch Pricing is similar to Block Pricing but applies to options within a bundle, allowing quantity-based pricing for each option.
Configuration Steps:
- Define product options within a bundle.
- Set each option’s pricing method to “Block” and specify quantity ranges with corresponding prices.
Example Use Case:
A telecommunications company offering a bundled package with optional add-ons, where the add-on price varies based on the selected quantity.
8. Prorated Pricing
Prorated Pricing applies to subscription-based products, calculating prices based on the actual subscription term, ensuring accurate billing for partial terms.
Configuration Steps:
- Set the product as a subscription with a defined term.
- Enable proration settings to calculate prices based on the subscription period.
Example Use Case:
A SaaS provider offering monthly subscriptions, billing customers for only the portion of the month they use the service.
9. Usage-Based Pricing
Usage-Based Pricing charges customers based on their actual usage, suitable for industries where consumption varies.
Configuration Steps:
- Define usage metrics and associate them with the product.
- Set pricing tiers or rates according to usage levels.
Example Use Case:
A cloud storage provider charging based on the amount of data stored by clients, aligning charges with actual usage.
10. Custom Pricing
Custom Pricing is for unique pricing strategies not covered by standard methods. It often involves custom development to meet specific requirements.
Configuration Steps:
- Develop custom logic using Salesforce Apex or declarative tools.
- Integrate the custom pricing logic into the CPQ process.
Example Use Case:
A business with a complex discount structure based on factors such as customer loyalty, order history, and seasonal promotions.
Comparison of Salesforce CPQ Pricing Methods
| Pricing Method | Ideal For | Example |
|---|---|---|
| List Pricing | Standardized pricing | Fixed software license price |
| Cost Plus Markup Pricing | Custom manufacturing with variable costs | Machinery production costs |
| Block Pricing | Bulk sales | Quantity-based discounts |
| Percent of Total Pricing | Add-on services | Installation fee based on total equipment cost |
| Contracted Pricing | Negotiated customer agreements | Discounted rates for long-term clients |
| Option Pricing Within Bundles | Customizable product bundles | Selectable components in a PC bundle |
| Batch Pricing | Quantity-based option pricing within bundles | Telecommunications bundles with add-on options |
| Prorated Pricing | Subscription-based billing | SaaS provider with prorated monthly billing |
| Usage-Based Pricing | Variable consumption billing | Cloud storage billing based on data usage |
| Custom Pricing | Unique pricing strategies | Discounts based on loyalty, order history, or seasonal promotions |
Each of these pricing methods in Salesforce CPQ enables businesses to address diverse sales requirements and optimize pricing based on specific scenarios. Understanding and implementing the right pricing strategy helps ensure accurate, fair, and efficient quoting, ultimately contributing to better customer satisfaction and sales success.