Salesforce Revenue Cloud (CPQ + Billing) Interview Questions

1. What is CPQ?

CPQ is Configure Price Quote. It is a Sales related tool.
Let’s understand with help of example. Prospective customer goes to mall and see the products. Customer fill forms and give number to sales agent. So, he become lead for that product. Now sales person makes to the prospective customer call asking interest in product. So, from lead prospect, there is qualification. Now, prospective customer says I am interested but request for discount. This is called pricing negotiation. So the sales person sends quote with price to customer. After that again customer bargains which is called negotiation. After Quote is Finalized, order is placed for the product. If it a subscription product then contract is created. If it is non subscription product then asset is created.

2. How many types of products are there?

There are 4 types of products

Perpetual / One Time product: Product which becomes asset is called one time product like Fridge, TV.
Subscription Product: It is Netflix and Amazon Prime which are subscription products.
Usage Based Product: Jio Data Plan is an example of usage based product. Upto 5GB it is free after that it is charged based on usage.
Multi-Dimensional Product .

3. Why we use CPQ?

In Salesforce we have Product Catalog. Without CPQ we need to maintain product list in excel. Excel had number of products, product family and use filter. Now if 10 products are added or removed we need to maintain excel
or if a product feature is removed we need to update the excel which is complicated.
Another problem is managing pricing. Different products can have different prices in different countries and the value can change daily based on currency. Now updating daily this in excel is very complicated.
Giving discounting is also hard without CPQ. With CPQ we can automate discounting process.
The benefit of using CPQ is it increases sales productivity. It reduces manual effort of sales team.It reduces probability of making human errors.

4. What is CPQ Lifecycle?

Lead -> Opportunity-> Quote-> Order

5. What is product?

Product can be individual product or combination of multiple products and generate revenue for the company.

6. What is product bundle?

Group of products sold together is product bundle.

7. How many times of bundle in salesforce?

Static Bundle.
Dynamic Bundle.
Nested Bundle.

8. What are the steps in Quote to cash process in CPQ

Product Configuration.
Pricing.
Quoting.
Approvals.
Contracting.
Order Management.
Invoicing.
Revenue Recognition.
Renewals and.
Amendments

9. Explain Pricing Methods in Salesforce CPQ ?

list price in Salesforce CPQ

List price is the price that is retrieved from the price book entry. Each product must have a price book entry or else the product will not get listed on the selection page of the quote line editor.

Cost Price

Cost price is used when a product costs a specific amount to obtain, then you can add cost price and add markup price on the product.

Block pricing

Block pricing is the pricings that are updated based on the quantities of the product purchased. For e.g., a pack of 1-10 units will cost 10$, 10-20 units will cost 18$ and so on.

To set up the block pricing we need to update the 4 pieces of information.

Name: Set the name to block the pricing method.

Lower bound: The lowest quantity for the quantity range. Upper bound: The highest quantity for the quantity range. Price: Price to be set up for the given quantity range.

Note: A block price’s upper bound and the next block price’s lower bound must be the same.

Percent of Total : Percent of the total is calculated based on the percent of the sum of all the other product that is purchased. For example, the tip for a bill at a restaurant would be calculated in this category.

10. Explain the concept of “Option Pricing”?

Imagine you’re throwing a pizza party and Domino’s has this deal called the “Pizza Party Pack.”- which includes pizzas, sides, and drinks.

Here’s how it works: Option Pricing: In the “Pizza Party Pack,” garlic bread doesn’t cost $5; it’s just $3.75! It gets a price cut because it’s in a bundle. Steps:

First, you add garlic bread to your cart – it’s still $5.
Then, you choose the “Pizza Party Pack” and the garlic bread in your bundle is now priced at $3.75.

What’s happening here, due to the concept of Option Pricing, is that the system checks if garlic bread is part of the “Pizza Party Pack.” the discounted price of $3.75, as specified in the bundle option, kicks in.

11. Explain Limitations in Option pricing?

Option pricing does not support multicurrency, so it’s only possible to define the override price in a single currency.

12. Explain Contracted Pricing in Salesforce CPQ?

Imagine Domino’s has a loyal customer company, “Pizza Lovers Texas Inc.,” a local business that orders pizzas for its staff every Friday. Since they order so frequently and in bulk, Domino’s wants to offer them a special deal.

Here’s how it works: Normally, a large veggie pizza costs $15. But for Pizza Lovers Texas, Domino’s sets a contracted price of $12 per pizza, a loyalty gesture.

On Domino’s Salesforce CPQ system, they go to Pizza Lovers Texas’s account.
Navigate to the “Related” tab, and in the “Contracted Prices” section, they click “New.”
They select the veggie pizza in the “Product” field and enter $12 in the “Price” field- the contracted price is set.

13. Explain Price Waterfall?

The CPQ Pricing Waterfall is a multi-step process/sequence that utilizes different prices and discounts to get us to the Net Price . It is described as a waterfall as it works its way from top to bottom through the different prices and discounts/adjustments.

List Price: This is the starting point – the menu price. Let’s say the List Price for Domino’s “ExtravaganZZa” large pizza is $20, as listed in their Price Book.
Contracted Price: Domino’s has loyal customers, like the “Pizza Club,” who dine-in every Tuesday. They’ve negotiated a 5% discount on all pizzas through a loyalty program. So, for them, the Contracted Price for the “ExtravaganZZa” isn’t $20 but drops to $19 ($20 minus 5%).
Special Price: On occasions, Domino’s offers a special one-day promotion, like “Cheesy Thursday,” where all pizzas have an additional 10% off. This promo is applied on the Contracted Price or the List Price. For the loyal “Pizza Club,” this takes their $19 pizza down to $17.10 for that day.
Prorated Price: Suppose one member of the club wants to buy half of an “ExtravaganZZa” and half of a “Veggie Delight” (also priced at $20). Dominos calculates a Prorated Price, where they take the Special Price
($17.10) and multiply it by a factor considering the half-and-half scenario, let’s say 0.5 for each half, equating to $8.55 for each half-pizza portion.
Regular Price: If there’s no special scenario, the Regular Price kicks in. It’s either the Prorated Price or goes back to the original List Price. So $19 per “ExtravaganZZa.”
Customer Price: It is the final price that a direct consumer pays after all applicable discounts and special prices are considered. For the “Pizza Club” members dining on a “Cheesy Thursday,” their Customer Price for an “Extravaganza” would be the special rate of $17.10.
Partner Price: The Partner Price is a special rate offered to business partners, usually lower than the standard rate, to accommodate the partners’ profit margins. For instance, a food delivery app ’Uber’ might receive the “ExtravaganZZa” at a Partner Price of $16, allowing them to mark it up for their customers.
Net Price: It is the revenue that the seller keeps from the sale after all discounts, allowances, or rebates are deducted. The Net Price reflects the actual revenue the seller makes on the product before their internal costs are subtracted. In the Domino’s case, the Net Price is the amount Domino’s records as revenue for the “ExtravaganZZa” pizza sold to the club member on “Cheesy Thursday”.

14. Can sales reps offer product as part of a bundle at a different price with Salesforce CPQ, even though it’s the same product listed in the price book?

Yes! Salesforce CPQ allows for advanced pricing configurations. For instance, a bottle of “Coke” might be priced at $2 when sold individually. Still, when part of the “Family Feast” bundle (which includes pizzas, sides, and a drink), the effective price of the “Coke” within the bundle might be just $1.50. This differential pricing is possible within the same price book due to the flexibility of Salesforce CPQ.

15. What is the use of Bundled Checkbox?

If Domino’s decides that the “Party Combo” is a special promotion and the individual items in it (the options) should not be priced as they usually are when sold separately, they will check the “Bundled” checkbox in Salesforce CPQ for this combo. This means that even if a “Veggie Pizza” usually costs $18 on its own, within the “Party Combo,” it’s priced at $0.00, as are the other items in the combo.

16. Explain Discounting in Salesforce CPQ ?

17. What is optional Discount in CPQ?

Domino’s offer a Product Bundle, similar to a combo deal, called the “Pizza Fiesta.” This bundle includes a large “Veggie Extravaganza” pizza, “Cheesy Bread,” and a soda.

18. Explain Partner and Distributor Discount in Salesforce CPQ?

This method is used when we want to give an additional partner discount to the client. The values for these discounts are displayed in the Distributor Discount and Net Unit Price fields on the Quote Line object. They are calculated by the following formulas:

Partner Price = Customer Price – Partner Discount

Net Price = Partner Price – Distributor Discount

19. Explain Volume Based Discounting?

Domino’s wants to give an incentive to customers to order more pizzas during a cricket world cup by offering volume-based discounts.

20. Explain Manual Discount feature in Salesforce CPQ?

Imagine a regular customer places a bulk order for an upcoming party. They ordered 20 “Veggie” pizzas, each originally priced at $10. To reward this bulk purchase, the sales manager has decided to offer a special discount. Instead of the regular price, they want the total cost for the 20 pizzas to be $150, instead of $200.

21. How to setup multi currency for the product?

Go to Setup –> Company Information

Click on the Edit button

Check the Activate Multiple Currencies box and click Save

You will now see an extra button called Currency Setup, click it

By default, Advanced Currency management will be off

By default Parethentical Currency Conversion will be on – this is what you will see on any currency field when your default currency and the currency of the record you are on do not match.

In the Active Currency section, click New

Select your Currency Type, add your conversion rate, and set your decimal places

22. What is a Subscription Product?

A subscription product is a product that has some recurring payment element to it, whether it be a monthly payment, or an annual subscription.

23. I want to give pricing slab 1-10-100,1-20-300,1-30-400 getting increase of every product how to setup in CPQ?

To set up a pricing slab in Salesforce CPQ where the price increases with the quantity, you can use the Price Book Entries and Block Pricing. Here’s a step-by-step guide to set up the pricing slabs you described (1-10 units at $100 each, 1-20 units at $300 each, 1-30 units at $400 each):

Create the Product
Set Up Price Book Entries
Create Price Book Entries
Configure Block Pricing

24. Explain Quote Line Editor?

Quote Line Editor in Salesforce CPQ provides options to add or remove products, adjust product quantities, apply discounts or markups and calculate prices for the products added on the quote.By default, Quote Line Editor shows products added on the quote and specific fields from the Quote Line object.

25. What is product bundle in Salesforce CPQ?

Products: The bundle product as well as all the sub-products included in the bundle.
Product Options: A Product Option record for EACH sub-product to associate it with the bundle product. One Bundle can have many Product Options.
Product Features: Optional. Product Options having similar characteristics can be grouped together using a Product Feature. One Bundle can have many Product Features.
Option Constraints: Optional. Option Constraints ensure that all users select only compatible options.
Configuration Attribute: Optional. Set the value of a specific field on multiple Product Options included in a Bundle or Feature.

26. Subscription Product in Salesforce CPQ?

CPQ provides additional fields on products that allow you to do subscription pricing.

Subscription Pricing – Type of pricing to use for this subscription, either None, Fixed Price or Percent of Total. None means this product is NOT a subscription product.

Subscription Term – Term length of this subscription. Only applicable if the product is a subscription. A BLANK value means this product is NOT a subscription product.

Subscription Type – Select the type of Subscription, either Renewable or One-time. Renewable Subscriptions transfers to Renewal Quotes. One-time Subscriptions will not.

To enable a product to be ordered as a subscription product, Subscription Pricing, Subscription Term and Subscription Type fields have to be set up appropriately.

27. What is Option Constraints?

Option Constraints allow you to enable or disable a Product Option for selection based on the selection of another product option in the same bundle product.

Option Constraint Types

Based on its behavior, Option Constraints are of two types, Dependency and Exclusion. It is determined by the Type field on the Option Constraint record.

Dependency

Selecting the Constraining Option enables the Constrained Option for selection.
For example – Enable Product A only if Product B is selected.

Exclusion

Selecting the Constraining Option disables the Constrained Option for selection and vice versa.
For example – Disable Product A if Product B is selected.

28. What is use of lookup query in salesforce CPQ?

Imagine you work for Dell, which sells laptops. Dell offers special discounts based on where the customer is located. We set up a Lookup Query to make this happen automatically.

29. How to add Additional Discount in CPQ?

In Salesforce CPQ, additional discounts can be applied directly in the Quote Line Editor. This allows sales representatives to apply extra discounts on top of existing pricing rules and discounts.

30. What is a Quote Template?

A quote template is a pre-designed document layout that sales teams use to generate consistent and professional quotes for their customers.
These templates typically include fields for product descriptions, quantities, pricing, terms and conditions, and other relevant information.

By using quote templates, businesses can ensure that all necessary details are included in each quote, reducing the likelihood of errors and streamlining the quoting process.
In the CPQ process, quote templates are essential. After configuring the product and pricing,

31. What Are Quote Templates in Salesforce?

Standard quote templates: These are the default templates provided by Salesforce. They offer basic functionality and can be used to create quotes without any additional customization. They include elements like product details, pricing, terms, and conditions.
Custom quote templates: Custom templates offer a high degree of flexibility and can be tailored to specific requirements including company branding, specific fields, custom layouts, and more detailed information.

32. What is the Difference Between Invoice and Quotation Template?

invoices serve as legally binding documents, detailing purchased items and services, as well as the total amount owed by a customer. The invoice record stores essential data such as the balance, due date, and payment status.
On the other hand, a quote template is used to create and customize non-binding quotes for potential customers. It outlines the proposed products, services, pricing, terms, and conditions before a sale is finalized.

33. How are Orders created in Salesforce CPQ?

Orders are an agreement between a company and a customer. Typically, the process starts with the opportunity, which is a potential sale, then a quote is created. The next steps will be order generation, where quote specific information is going to be copied on the order record, and the quote lines information will be transferred to their corresponding order products, then finally comes order activation.

In Salesforce, there are four ways to generate orders that can be used for different business situations:

Ordered Checkbox on Opportunity This method is used when an opportunity has been finalized, and you need to create an order based on that opportunity.
Ordered Checkbox on Quote This method is used when a quote has been accepted, and you want to generate an order directly from the quote.
Create Order Button on Opportunity This method is useful when you prefer a manual approach to generate orders from opportunities, offering more control over the process.
Create Order Button on Quote Similar to the opportunity-based button, this is used for manually generating orders from quotes, giving you the flexibility to review details before creating the order.
Each method provides a different level of automation and control, allowing businesses to choose the approach that best fits their workflow:

34. How Contract can be created in Salesforce CPQ?

In Salesforce CPQ, a Contract can be generated for subscription products by selecting the “Contracted” checkbox on either the Opportunity record or on an Order record.

35. How to create Contract from Opportunity?

To create a Contract from an Opportunity, select Contracted on your Opportunity record, and then save your changes. The contract inherits its start and end dates from your Primary Quote’s start and end dates. Salesforce CPQ then creates a Subscription record for each of your Subscription Products from the Primary Quote.

36. How to create Contract from Order?

To create a Contract from an Order, select Contracted on your Order record, and then save your changes. By default, Salesforce CPQ creates a Contract for each group of Subscription Order Products with matching end dates.

37. How do renewals and amendments work in Salesforce CPQ?

A renewal is when a customer decides to continue their contract after it ends, kind of like renewing a library book so you can keep it longer.

An amendment is when you change something in the contract while it’s still going on, like if a customer wants more services or needs to cancel something they don’t use anymore.

38. How to create a renewal opportunity and quote?

Create a renewal opportunity by clicking on ‘renewal forecast’ checkbox on contract.
Create a quote for renewal opportunity by clicking the ‘renewal quoted’ checkbox on contract.

39. What happens when ‘Contracted’ checkbox is checked on opportunity?

When ‘contracted’ checkbox is checked then

A new contract gets created.

The created Contract is attached to the related list of Account.

Subscriptions and Assets are attached to the related list of Account

40. What are some important fields on contract?

Account Name
Status
Contract Start Date
Contract End Date
Contract Term

41. Why are only ‘Subscriptions’ are shown but Assets not shown as related list of contracts?

Assets are only one time purchase so they are not added to contracts.

42. Can you discuss the standard process for creating and managing a renewal in Salesforce CPQ?

So, imagine a customer’s contract is about to end, and we want them to continue using our service. In CPQ, we create a “renewal opportunity”
which is like a reminder that we need to get them to sign up again. Then, we make a “renewal quote” with all the pricing info. We can change things if we need to, like the price or what’s included.

43. What are some best practices or advanced strategies for managing early renewals in CPQ?

Early renewals are when customers decide to renew their contract before it ends. This can be good for them because they might get better deals.

44. Can you handle bulk amendments or bulk renewals in Salesforce CPQ, and if so, how?

Yes, we can! Handling lots of changes or renewals at once is called “bulk” processing. This can be done through data loaders or by using CPQ’s own bulk features.

45. How do you deal with proration on amended subscriptions in Salesforce CPQ?

“Proration” is when you adjust the price based on the time. Like, if a customer adds a service halfway through their contract, they shouldn’t have to pay the full price for that month. In Salesforce CPQ, we set up proration rules that automatically figure out these adjustments. This makes sure customers are charged fairly, and everything adds up correctly at the end of the day.

46. Can you walk us through the steps you take for adjusting a contract when a customer is being double-charged due to an early renewal?

If a customer’s being charged twice because they renewed early,
1. First, I go into their account and find the current contract.
2. Then, I click ‘Amend’ to start making changes. I need to give them back the money for the time they were double charged, so I set the start date for the changes to when the new period begins.

1.Once you click on amend button you see list of subscriptions which can be ammended

2. Once we click on amend button an amendment opportunity is created in the backed. You are taken to Quote line Editor screen where you can make changes.

3. The quote will be created and attached to Amendment Opportunity.

4. You will not see all the products but only the products with changes made.

Note – Amendment opportunity doesn’t create additional contract but keep all the changes to existing contract.

5. When you go to the contract, the new amendment quote will be added as related list as ‘Co – Terminated Quotes’

47. Could you explain the importance of the ‘Amend’ function in Salesforce CPQ during the contract renewal process?

The ‘Amend’ function is super important when we’re dealing with contracts. It lets us make changes to a contract that’s already going on, like when we need to give a customer their money back because they renewed it early.

48. In your experience, what are the common challenges you face during the early renewal process and how do you handle them?

One big challenge is making sure you don’t mix things up when some products are being renewed and others aren’t.
Another challenge is making sure the credit is right.

49. What are renewal pricing methods?

Same – This will take the same price, including discounts, from the original Opportunity and apply them to the Renewal Opportunity /Quote at the time of creating the Renewal.

List – It takes the List price of the Product based on the Pricebook in used in the Original Opportunity unless you have noted a Renewal Pricebook ID on the Contract, in which case it will take that List Price. There will be no flow-through of Discounts if this option is selected.

Uplift – This is the only option that requires additional setup if you choose to use it. Uplift is for when you want to take your Customer price and add some percentage of increase on the Renewal Quote.

50.What’s the difference between ‘Co-Terminated Quotes’ and regular quotes in Salesforce CPQ?

‘Co-Terminated Quotes’ are special because they’re used when we make changes to a contract that’s already going on. Regular quotes are just the usual offers we make to customers.

51. In Salesforce CPQ, how do you handle a scenario where a customer wants to downgrade or remove services during renewal?

If a customer wants less or different stuff at renewal, I use the ‘Amend’ function to remove or change what they don’t want anymore.

52. What steps do you take in Salesforce CPQ when a customer wants to renew their contract earlier than the original end date?

When customers want to renew early

I first create a new quote for the renewal.
I then adjust the start date to match when the customer wants to renew and make sure any old charges stop when the new contract starts. This way, the customer doesn’t get charged twice for the same thing.

53. Can you explain the process of transferring assets during an amendment in Salesforce CPQ?

In Salesforce CPQ, if a customer wants to move a service from one contract to another, I use the ‘Amend’ feature to move it, making sure it’s removed from the old contract and added to the new one.

54. What is the difference between contract-based renewals and asset-based renewals?

Contract-based renewals involve the entire contract, while asset-based renewals deal with specific assets or subscriptions within a contract.

55. What is contracted pricing in Salesforce CPQ?

Contracted pricing refers to special prices associated with a particular customer, which are considered during the quoting process.

56.Can you set contracted pricing at different levels?

Yes, you can set contracted pricing at the product level or the quote level.

57. What is the role of the “Renew Contracts” button in Salesforce CPQ?

This feature allows users to select multiple contracts for an account and merge them into one master contract for renewal.

58. Can you change the pricing of existing products during the amendment process?

No, you can’t change the pricing of existing products; you can only modify quantities or add new products.

59. Why is there a separate opportunity and quote created for amendments?

This helps in maintaining a detailed history and traceability between the original and amended contracts.

60. What happens if you set the “Generate Contracted Price” action at the quote level?

It will apply the contracted price only for that quote.

61. How does Salesforce CPQ support early contract termination?

Users can set the quantity to zero for all SKUs from a specific date, effectively terminating the contract early.