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Guide to Product Options and Variations in CPQ

Configure price quote (CPQ) software is often used to configure complicated products that have a variety of options and variations. This can be a challenging process when a purchase has many SKUs, but a well-designed CPQ system will make it easy for your customers to select the right product options and variations for their needs.

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In this blog post, we will discuss the different types of product options and variations that you may encounter in CPQ, and provide tips for setting up your system correctly.

Why Should You Care About Product Variations and Options?

Product options and variations can be a complex topic, but it is important to understand the basics in order to configure your products correctly.

Product options are usually defined by the manufacturer and are often used to customize products for specific markets or customers. For example, a product may come in different colors, sizes, or configurations for the Latin American market.

Product variations, on the other hand, are usually created by the seller. These are typically used to offer different versions of a product that have different features or pricing strategies. Variations are important because they offer more combinations a potential customer will likely look for, which can boost satisfaction.

For example, you may sell a product that comes in two different sizes, small and large. You could also offer a variation of the product that includes a carrying case.

Product options are important because they can be used to create the best fit for a particular market or demographic. Then, product variations can be used to create a unique customer experience—the perfect product for one specific buyer.

By offering different options and variations, you can make sure that your customers find the perfect product or product bundle for their needs. Options are more important to meet the needs of a market or demographic, and variations make up part of product options.

In addition, understanding product options and variations can help you avoid potential errors when configuring your products. If you do not set up your product options and variations correctly in your CPQ software, you may end up with an inaccurate quote or an incorrect order.

How Do Product Options Work in CPQ?

Product options usually come in two forms: mandatory and optional. Mandatory product options are required in order for the customer to purchase the product. For example, if you sell a shirt that comes in different colors, the color would be a mandatory product option.

Optional product options are not required for the customer to purchase the product, but they may be interested in them nonetheless. An example of an optional product option would be monogrammed initials on a shirt.

In CPQ, product options can be represented in different ways. In CPQ, a configuration has the notion of required or optional; if something is required, it can be marked as such and the user cannot proceed without selecting it, or the user is notified that a required selection has not been made and cannot proceed unless this is rectified.

How Does CPQ Manage Product Variation?

Product variations are often managed using a matrix in CPQ. A matrix is a table that shows the different combinations of product options and variations that are available.

For example, let’s say you sell a shirt that comes in two sizes—small and large—and three colors: red, blue, and green. This shirt also has the option to be monogrammed. The matrix for this product would look like this:

  • Size|Color|Monogram
  • Small|Red|Yes
  • Small|Blue|Yes
  • Small|Green|Yes
  • Large|Red|Yes
  • Large|Blue|No
  • Large|Green|No

As you can see, the matrix lists all of the possible combinations of product options and variations—and you can immediately see how complex it could get with a complicated product.

When a customer selects an option from one of the drop-down menus, the other options in the matrix are automatically updated to show only the combinations that are available.

For example, if a customer selects “small” from the size drop-down menu, the color drop-down menu will update to show only red, blue, and green.

CPQ Option Constraints and Challenges

One challenge that you may encounter when configuring product options and variations is option constraints. Option constraints are rules that limit the combinations of product options and variations that are available.

Let's use the previous matrix as an example of this point.

  • Size|Color|Monogram
  • Small|Red||Yes
  • Small|Blue||Yes
  • Small|Green||Yes
  • Large||||No

However, let’s say that the large size is only available in the color blue. In this case, you would need to add a constraint that says, “large size can only be selected if the color is blue.”

If you do not set up your option constraints correctly, your customers would be able to select product options and variations that are not actually available, tanking their user experience and leading to frustration during the checkout process.

In addition to option constraints, another challenge that you may encounter is managing inventory. If you offer a product that has many different options and variations, it can be difficult to keep track of which products are in stock and which are out of stock.

Here’s where technology comes into play: to alleviate this you may want to consider using a CPQ system that offers inventory management capabilities. With this type of system, you can easily keep track of which products are in stock and which are out of stock.

PROS CPQ Software

If you’re looking for CPQ software that can help you manage product options and variations, try the PROS Platform. Our platform, known as profit optimization software, offers a variety of features that can help you configure your products quickly and easily.

In addition, our software offers inventory management capabilities that can help you keep track of which products are in stock and which are out of stock.

To learn more about our CPQ software, contact us today to speak to one of our specialists.

About PROS: (NYSE:PRO)

PROS is one of the best kept secrets for profitable growth. For over 35 years, we have been uniquely positioned in the tech industry offering the world’s only AI based platform that helps businesses grow their margins and revenues. With more than 20 patented AI algorithms and 30+ million AI models, the PROS Platform is powered by advanced AI science that continuously delivers actionable insights based on the unique conditions of every buying engagement. These insights give companies more visibility into market volatility and allow them to rapidly adjust prices and quotes in response to real-time market shifts, feeding daily decision making and supporting longer-term business strategy and profitability. PROS AI is the driving force in updating more than 400 million prices and 1.7 billion forecasts daily in more than 30 industries around the globe.

About the Author

Eric Knutson, Senior Manager, Product Marketing at PROS, leads the go-to-market strategy for PROS Configure Price Quote solution. Eric is a product marketing professional with a strong international B2B background and more than twelve years of industry experience in collaboration, content management, and data management solutions. He is passionate about improving the dynamic between vendors and customers, so engagements, transactions, and most importantly relationships are both more efficient and rewarding.

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