CPQ: Protecting Margins in Choppy Waters

Economic storms have become the new normal for manufacturing CFOs. Every unexpected supply glitch, raw‐material spike or tariff announcement can rip margins out from under you. We at Experlogix have seen this all before in our nearly 25 years working with industry leaders. Our advice is simple: Configure‑Price‑Quote (CPQ) software isn’t a luxury now, it’s your margin’s best friend. By automating quoting with ironclad pricing rules and real‐time data, CPQ turns guesswork into governance – so even when chaos reigns, your profit stays protected.

Tariffs, Supply Chain Hiccups, and Inflation

Ports clogged, trucks stranded, parts shortages – the post‑COVID world has been a logistical nightmare for manufacturers. Global shipping rates surged to record highs during the pandemic (driven by soaring fuel costs, supply chain disruptions, labor shortages, and shipping port congestion). After some relief mid‑2023, new crises (Middle East conflicts and a Panama Canal drought) sent freight rates soaring again. This directly fed into input costs: Boston Fed economists found a tight correlation between shipping costs and U.S. import price inflation (both spiked in 2020 and again in late 2023). At the same time, commodity prices went through the roof – lumber, steel, copper and various basic foodstuffs hit multi‐year highs as economies restarted. The economic effects of labor issues, fuel costs, electronic chip shortages, and many other commodity groups were compounded by highly fluctuating demand curves. In practice, these factors saw raw costs for parts wildly jumping overnight, and many companies have simply passed those costs on to customers. The net result: CFOs watched their landed costs surge and margins erode in real time, scrambling to raise prices while customer budgets frayed.

And just when we thought things might settle down a bit and maybe get back to normal—(remember normal?)—then came the tariffs. Yes: tariffs.

Tariff Turbulence

Just as supply chains were finding their feet, trade policy uncertainty hit like a side gust. Surprise tariffs and trade wars can wipe out profits faster than you can recalc a quote. Case in point: in March 2025 the U.S. reinstated 25% Section 232 tariffs on imported steel and aluminum. Suddenly, any build containing those metals could carry a hefty new tax. In a survey of manufacturing execs, 86% reported higher landed costs from tariffs, and 83% said their margins on imported goods were squeezed. (Of those, 76% tried passing costs on, and others ate the hit.) [source: The Association for Manufacturing Technology’s Tariff Impacts on Manufacturing Technology Spot Survey (2Q2025)]. These tariffs are additive – they stack on top of existing duties – so experts warn companies that “costs of imported steel and aluminum products” have significantly increased, upending budgets and pricing plans. In plain English: an engineer might spec a product one day, then an hour later a new tariff announcement makes that bill of materials unprofitable. CFOs can’t afford that kind of volatility.

Margin Erosion in Your Quote‑to‑Cash

Here’s the rub: most margin damage happens well before production even starts – in the quoting process. Without the right tools, well-meaning sales reps routinely give deals away by accident. Rising customization demands, inflation and supply volatility are squeezing profitability at the quote stage. Under pressure to close, a rep may misconfigure an order or add-on option, use outdated cost data or blast out deep discounts just to win a deal. In engineer‑to‑order manufacturing, these problems can quickly turn a quote into an unprofitable sale. Systematically execute a series of such deals and what you have is a business killer. By contrast, with a leading CPQ solution connected to your accurate and timely cost data, inventory data, and margin guardrails, you can avoid selling products that cost much more to build than you charge. For example, a unit might look great on paper until you realize it depends on a scarce part with a 12‑month lead time and/or a volatile base cost. A smart CPQ will flag that for you. In fact, CPQ systems can pull in supply‑chain data so you avoid quoting an option that’s going to blow your margin or miss promised delivery dates.

Without CPQ, your traditional Excel-based quoting is a margin kill zone. After one too many painful quarters, executives ask: what measures can we put in place to enforce our pricing rules and quoting processes, so we stop doing bad deals? That’s exactly what CPQ does.

How CPQ Stops the Bleeding

CPQ safeguards your margins. It enforces your pricing rules and uses up‑to‑date master data so that every quote adheres to your company policies. Instead of relying on memory or gut feel, reps get guided selling that limits options to profitable bundles, dynamic pricing that automatically reflects new costs or tariffs, and built‑in approval workflows that stop rogue discounts in their tracks. In practice, even a basic CPQ solution enables dynamic pricing strategies and configurable pricing rules, so changes (like a new steel tariff) ripple instantly through all quotes. Guided prompts help reps select upsell bundles or higher‑margin options that best meet customer requirements. And discount controls enable reps to immediately see how any markdown affects their profit, while precluding approval of steep discounts that would have your margins falling off a cliff. Good CPQ solutions enable resulting quotes that are fast, accurate, compliant, and profitable.

• Dynamic, Data‑Driven Pricing: CPQ continuously pulls live cost data from your ERP, so every quote uses the latest prices. Need to add a 10% tariff on imports overnight? CPQ does it for all quotes at once. No more quoting old cost sheets or Excel file version guesswork.
• Automated Discount Controls: Pre‑configured approval tiers prevent reps from giving away the farm. If a rep tries to exceed a discount threshold, the system flags it for finance review. This built‑in guardrail ensures every deal meets your minimum margin target.
• Real‑Time ERP/CRM Integration: CPQ lives inside your ecosystem. It reads customer data and deal history from CRM and cost/inventory data from ERP, then writes back the quote when done. This end‑to‑end linkage means sales, finance and operations all share a single source of truth – no more silos or miscommunication.
• Guided Selling & Configuration: CPQ tames business complexities.  CPQ applies logic to steer salespeople toward high‑margin configurations. For instance, a CPQ might automatically exclude products or add-ons known to be out of stock or flag custom options with volatile raw‑material prices, so reps avoid money‑losing orders.
• Audit and Analytics: Every quote, price change and discount is logged. Leadership can then mine these records to spot trends – like which product lines are shrinking margins or which partner is flooding the market with heavy discounts. That insight means quicker pivots in pricing strategy.

With CPQ doing the heavy lifting, quote-to-cash becomes a smooth, transparent process. Sales teams love it because quoting is faster and more accurate, but CFOs get the real benefit: guaranteed margin compliance.

One System for All Channels

Modern manufacturers often sell through both in‑house reps and a network of dealers and/or distributors. CPQ can unify all those channels under one rulebook. Imagine you publish your approved price book and product catalog into a dealer portal: when a reseller quotes an end customer, they’re clicking through the same data your direct team sees. Each dealer or reseller may add their own preset markup (to cover their selling costs), but they see your core costs and discounts first. This kind of transparency stops hidden price leaks.

Likewise, you can expose different product sets to different channels without losing control. For example, CPQ lets you define which SKUs and options each channel can sell. Maybe some specialty items are only sold direct, while dealers have a leaner catalog—that’s easy to set up. Yet at all times, quotes from both channels sync back into your ERP.

In short, CPQ extends your pricing control beyond the four walls of your company, locking in margin standards whether selling direct or through partners.

Deep CRM/ERP Integration Is Essential

To truly weather economic turbulence, CPQ must be deeply integrated into your back office. Standalone quoting tools help a bit, but when CPQ lives in synchronization with the breadth and depth of CRM and ERP master data, it provides the best value and best protections. Deeply integrated CPQ ties together customer intelligence, sales pipeline data, inventory data, cost data, deal history, financials, and more. One of the key differences that Experlogix CPQ provides is its unparalleled depth in integration with CRM’s breadth of customer insight combined with ERP’s depth in operational truth and reality, creating a powerful quote-to-invoice flow.

In practice, this means your sales rep never has to leave the CRM to pull up a quote – and that quote automatically uses the exact costs and inventory from your ERP. Not only does this help you weather the next economic and supply chain surprise, it keeps your various teams and functions in sync too: imagine sales, operations, and engineering working together in harmony to make your business more profitable while delighting customers.

Real-World Resilience: Lessons Learned

Every line in this article is backed by real-world scars and successes learned in helping businesses like yours over the past 20+ years. We saw customers with Experlogix CPQ during COVID able to lock in margin even as costs swung wildly. Others who rolled out channel CPQ saw fewer discounts beyond policy, even while facing heavy and stiffening competition. Experlogix CPQ protects your business by consistently applying your business rules, business intelligence, and margin requirements—in each and every quote.

Put simply, a robust CPQ can turn an unpredictable business climate into a competitive advantage. When everyone is quoting to the same data and rules, you stop the slow leak of margins. You avoid awful surprises like a new tariff silently eating away at a signed contract. And because sales cycles are shorter (everything from quote generation to approval and fulfillment is automated), you have more time to react to market changes.

Think of CPQ as an insurance policy for your pricing. No, it doesn’t guarantee you’ll never negotiate a lower price—but it does provide that every discount and configuration will preserve as much margin as possible. In a landscape where trade policies change on a tweet and input costs swing by the hour, that level of control is essential.

Conclusion: Take the Helm with CPQ

Look, CFOs, COOs and CEOs – we get it. You’ve got one eye on the P&L and one on the news ticker. Surprises cost money. But here’s the slightly edgy truth: if you’re still trusting email and spreadsheets to handle pricing and quoting, you’re leaking margins. The companies that thrive are the ones who flipped the script – giving sales the agility to sell quickly while giving finance the confidence that deals are profitable by systematic design.

Experlogix has helped countless manufacturers (from industrial machinery to high-tech electronics) plug CPQ into their ERP/CRM backbone so quoting becomes a strategic strength. The result is measurable improvements to your top and bottom lines: shorter sales cycles, fewer pricing errors, and safeguarded margins that stay afloat—even when the economy feels like a perfect storm of headwinds, rogue waves, and the occasional tariff tsunami. Don’t let your margins go down the drain. Arm your team with CPQ! You’ll not only navigate the storm, you’ll come out of it stronger.

In these turbulent times, protecting your margins isn’t optional – it’s essential. A robust CPQ solution gives you centralized pricing control across every channel, data-driven flexibility in pricing, and intelligent integration with your systems so that every quote is optimized for margin. That’s the kind of quoting and pricing power that lets executives sleep easy when the world is anything but calm.

Experlogix can help you. Let’s talk!