Glossary > Dynamic Quoting

Dynamic Quoting

Reviewed By Eyal Orgil Published March 30, 2025

What is Dynamic Quoting?

Dynamic quoting is a flexible process for generating individualized price estimates for products and services based on specific customer requirements and current market conditions. It leverages configure, price, quote (CPQ) software to instantly create and send tailored quotes without sacrificing accuracy or customizability.

You can base dynamic quotes on a few different things, depending on your pricing model:

The customer’s selections (most straightforward)
Input costs like production, materials, and overhead
Competitive pricing data
Market demand or supply levels, such as in the airline industry (most complicated)
A combination of the above factors

To implement dynamic quoting, businesses need CPQ software that supports features like conditional fields for rules-based configurations and pricing tables with discount applications. Otherwise, sales teams can’t efficiently manage the complex product structures and pricing models that come with individualized products and pricing.

Synonyms

Dynamic price quoting
Intelligent quoting
On-demand quoting
Real-time quoting
Smart quoting

Understanding Dynamic Quoting

Today’s customers expect fast, tailored solutions that fit their unique needs. That’s true whether it’s a business ordering a custom-built piece of machinery or configuring a software package, or someone who’s in the market for a new Ford F-150. The ability to customize is what sets you apart from others.

This is precisely why agility in your sales operations is critical. Companies need the ability to adjust pricing on the fly, accommodate custom requests, and respond to customers in real time. The more friction you remove from the buying experience, the more likely you are to close deals quickly and keep customers happy.

Dynamic quoting vs. traditional quoting

The traditional quoting process is pretty rigid. Think of it like a static menu at a restaurant. You have predefined products or services with fixed prices, and if a customer wants something slightly different, it requires a back-and-forth process (with the possibility that you can’t accomodate).

Here, sales teams have to manually calculate adjustments, get approvals, and sometimes even involve multiple departments before sending out a final quote. It’s slow, inefficient, and prone to human error.

Dynamic quoting is more like a custom-built meal at a build-your-own-bowl restaurant (though it can also be more complex than this). The price is calculated in real time based on your exact order.

Instead of relying on a static pricing sheet, businesses with dynamic quotes use intelligent CPQ systems to instantly generate accurate, personalized quotes based on a customer’s needs. The system takes into account factors beyond item selection, like material costs, labor, volume discounts, current market conditions, and even competitor pricing.

The whole process is rules-based and automated. If a customer selects a certain set of features, the system makes a live pricing adjustment, considering things like market data, input costs from ERP, customer-specific pricing, and your company’s pricing and discount rules.

Key characteristics of dynamic quoting

Like we mentioned above, dynamic quoting can either mean you’re offering a product or service that’s highly customizable with multiple variables (e.g., industrial equipment), you’re offering a product with a constantly changing price using a dynamic pricing strategy, or both.

To support these kinds of strategies without sacrificing your margins or blowing up your sales ops team, you need an intelligent system that can calculate complex pricing scenarios in real time.

That means there are a few essential features your system needs:

Autoamted price adjustments

One of the biggest advantages of dynamic quoting is its ability to adjust prices in real time. Traditional quoting might require manual calculations or approvals, but with dynamic quoting, a system can instantly calculate a price based on live data, whether that’s fluctuating material costs, supply chain changes, or competitor pricing.

For example, if you’re selling industrial equipment and the cost of raw materials increases overnight, your pricing system can automatically factor that in so you’re never offering outdated or unprofitable quotes. On the flip side, if there’s an opportunity to offer a discount based on volume or seasonal demand, the system can apply that dynamically as well.

Rules-based and configurable quoting

Dynamic quoting isn’t just fast, it’s also wicked smart. You can set up pricing rules based on factors like customer segments, purchase history, contract terms, and bundling discounts. This means that instead of relying on generic price lists, each quote is tailored to fit a specific scenario.

Let’s say you run a SaaS company offering different software plans. A large enterprise customer might automatically get a volume discount based on the number of users or years of commitment, while a startup might qualify for a separate incentive for being an early adopter.

Instead of a salesperson having to manually calculate these discounts, the CPQ system applies them based on your predefined rules, which guarnatees consistency and efficiency.

Seamless integration with CRM, ERP, and ecommerce

Dynamic quoting only works when it’s connected to other business systems like CRM (customer relationship management), ERP (enterprise resource planning), and ecommerce platforms (for self-service quoting). This ensures that quotes are always based on the most up-to-date customer data (CRM) and inventory/pricing data (ERP).

For instance, if a customer wants a quote through your website’s product configurator, the system can instantly pull in their past purchase history, check inventory availability and costs in ERP, and generate an accurate price without requiring a manual review from a salesperson.

Data-driven optimization and insights

CPQ systems process transactions, meaning they also generate valuable data you can use to refine your pricing strategy. Companies can track which configurations sell the most, where customers drop off in the quoting process, and how different price points affect conversion rates.

For example, you might notice that offering a 5% discount for bulk orders consistently leads to higher close rates. So, you can refine your pricing rules to automatically apply that discount when customers meet the threshold. Over time, this leads to smarter, more effective pricing strategies.

The Role of Dynamic Quoting in Sales

In sales, dynamic quoting is all about aligning your sales process with the way customers want to buy, while offering a price that’s (a) fair for them and (b) feasible for you.

Instant pricing and interactive quoting enhance the sales process.

When customers or sales reps configure products, the price is reflected instantly. That means your buyers can see right away how different options affect the final cost, and your salespeople can suggest alternatives or upsell without having to go back and forth with operations or pricing.

Interactive quoting also improves the buying experience, especially when you’re dealing with physical products. Visual configuration and 3D modeling can play a huge role in helping customers understand what they’re getting, which reduces the chances of misunderstandings and dissatisfaction. Plus, it facilitates faster decision-making.

Software reduces configuration, quote, and approval delays.

Within CPQ, you can create approval workflows for all sorts of requests, from discounts on bundled products to custom quotes. CPQ also automates quote creation and approval, which can save you hours of manual work in each case.

In some cases, you can even itegrate it with a collaboration tool to make approvals easier. With DealHub CPQ, you can integrate Slack for one-click quote approval within a Slack channel. So, your sales manager doesn’t even have to switch apps to approve a deal.

In some cases, we’ve seen deals get approved as much as 500% faster.

Complex pricing models are simplified and automated.

Product complexity carries with it an inherent level of pricing complexity.

Chances are, you use one or more (or all) of these models in some way, for at least some of your customers.

With CPQ, you can create pricing structures that reflect all of these factors and more. Plus, with automated pricing and discount applications, you can be sure your sales team is always quoting prospects at the most accurate and up-to-date price point.

Dyanmic pricing needs dynamic quoting.

There is no dynamic pricing without it. Since prices change frequently (sometimes several times per day) with dynamic pricing strategies, you need an adaptive quoting system that reflects these changes as they come.

Advanced CPQ with AI-powered quoting uses a pricing engine. This calculates prices based on inputs like market dynamics, raw materials costs, and target profit margins, so the salesperson can see them when building the quote.

Benefits of Dynamic Quoting

Compared to a traditional approach, dynamic quotes are more accurate, up-to-date and faster. Plus, they offer a range of other benefits that make the sales process easier for reps and better for bottom-line results.

Let’s take a look at some of the most essential benefits of dynamic quoting processes:

Increased sales agility

Pricing automation and dynamic pricing models make your business more agile. You can adjust the quote quickly based on each customer’s requirements, and you can update pricing in response to market changes and competitive pressures. That higher level of responsiveness helps you convert more customers and differentiate on two fronts: pricing and personalization.

Improved quote accuracy

An inability to deliver consistent and accurate quotes is what holds a lot of companies back from an efficient sales process that converts. The rework and loss of trust that comes along with an inaccurate quote kills deals left and right. Automated quoting guarantees quote accuracy because it enforces your rules for configurations, pricing, and approvals 100% of the time.

Enhanced customer experience

Faster quote turnaround times and personalized offers make customers a lot happier to do business with you. And the ability to offer custom solutions and pricing without diminishing your scalability means you can take on more and more of these customers, without hurting your bottom line.

Higher win rates

In addition to streamlining your sales workflow and reducing the time in your sales cycle, the simple fact you’re able to offer competitive and data-driven pricing increases your conversion rate. Pricing is a huge sales driver, so aligning your prices with your customers’ needs and price perception is a surefire way to close more deals.

Stronger sales and finance alignment

Sellers might discount excessively to close more deals without even realizing it. Or, they could quote prices that are too low to be feasible for your business in the long run. Your finance team can work with your sales leaders to create guardrails in CPQ for pricing, discounting, and any other deal parameters so that both teams are aligned on revenue goals and profitability targets.

How CPQ Software Enables Dynamic Quoting

While standalone quoting software can be useful, it lacks the configuration capabilities and third-party integrations that CPQ offers. A standalone quote management software cannot configure custom products and services. It can only generate quotes, which makes it more useful for less nuanced sales processes.

There are several features within CPQ that make dynamic quoting possible:

AI-powered pricing recommendations
Automated approval routing, with multiple layers if needed
Real-time pricing updates for changes in discounts or promotions
Bi-directional integration with CRM, ERP, PLM, CAD, and other systems
Guided selling and product configuration tools to ensure accurate quotes
Visual product configurators to help customers understand complex products
Support for advanced pricing structures with subscription and consumption-based components

Again, a basic quoting tool might have some automated quoting features. What it doesn’t have is the advanced quote functionality needed to configure, price, and sell custom solutions at scale. Only CPQ can handle that.

Use Cases and Industries Leveraging Dynamic Quoting

Dynamic quoting is a game-changer for industries where pricing is complex, customized, or constantly changing. It’s especially valuable for businesses that deal with configurable products, usage-based pricing, or service packages with multiple variables.

Now, let’s break down some key industries where dynamic quoting has the biggest impact:

SaaS companies with usage-based and tiered pricing

Software as a Service (SaaS) is a software delivery model where users pay a subscription fee to access applications and services, rather than buying a license outright. Because of this model, SaaS companies have to process recurring payments from their customers.

Beyond that, they have:

Tiered pricing: Different levels of features (e.g., Basic, Pro, and Enterprise).
Usage-based pricing: Where customers are charged based on API calls, storage usage, or active users.
Custom enterprise pricing: Where large accounts need a tailored solution based on their business size, contract length, or support needs.

Dynamic quoting automates the pricing logic for these models. If an enterprise buyer needs a custom pricing plan with specific usage limits, CPQ can calculate the price in seconds. That way, the quote is accurate and competitive while minimizing manual work for sales teams.

Manufacturing businesses with highly configurable products

Manufacturers, especially those dealing with complex machinery or custom-built products, face significant quoting challenges.

Unlike retail, where prices are fixed, manufacturers often deal with:

Custom configurations: Customers select materials, dimensions, and additional features.
Volume discounts: Pricing changes based on bulk orders.
Fluctuating raw materials costs: Quotes need to reflect real-time cost adjustments.

Autoamted quoting allows them to offer instant, accurate pricing without back-and-forth emails or manual approvals. Customers can configure products online or with a sales rep, and the system generates an optimized visual quote right away.

Telecom and IT services companies with intricate bundling options

Telecom and IT service packages are complicated because they include multiple products and services, each with different pricing contingencies. Customers have a wide range of options to choose from, such as different internet speeds, phone plans, and cloud storage. And each requires a different price calculation.

Examples include:

Internet + Phone + TV bundles
Cloud storage + cybersecurity + customer support packages
Different contract lengths impacting price (monthly vs. annual commitment)

On the system’s backend, admins can create CPQ bundles. Then, whenever a seller builds a quote, they see the bundle suggestion or requirement and can either upsell it or require it before proceeding with the sale.

Professional services with project and retainer-based pricing

For businesses offering marketing, consulting, legal, or IT services, pricing can vary widely based on:

Project scope: More complex projects require more time and expertise.
Hourly vs. fixed pricing models: Some clients prefer hourly billing, while others want a set project price.
Additional services: Clients may need add-ons like post-project support, extra revisions, or training.
Retainer services: Many professional service companies offer retainer packages for ongoing support.

To accurately price projects and retainers, dynamic quoting in CPQ uses predefined rules for scope, time estimates, and service tiers. Instead of manually drafting each quote, professionals can instantly generate a price based on project variables.

Best Practices for Implementing Dynamic Quoting

Implementing dynamic quoting isn’t just about adopting the right technology. It’s about aligning your pricing strategy, sales process, and data flow to create a seamless, efficient experience.

For dynamic quoting to work at its full potential, there are a few best practices to keep in mind:

Create a pricing strategy that makes sense.

Before implementing dynamic quoting, make sure you have a clear understanding of your business goals and how pricing will support them. This will help determine what types of rules and logic you need to program.

Avoid making your pricing too complicated — customers need to be able to understand the value of what you’re selling and the cost associated with it. At the same time, don’t undersell your services by setting prices too low.

Integrate CPQ with your CRM and ERP.

CPQ is the backbone of dynamic quoting, but it only works effectively if it’s tightly integrated with your CRM and ERP.

CRM integration personalizes quotes based on customer history, preferences, and past negotiations.
ERP integration pulls in real-time cost data, inventory levels, and supply chain fluctuations so you know what’s possible and feasible.

Some businesses set up a one-way data flow (e.g., pulling customer data from CRM into CPQ), but bidirectional syncing is key. For example, if a customer changes their order in the CPQ system, it should immediately update in the CRM so reps can track changes and follow up.

For instant updates, it’s a good idea to use webhooks. Instead of batch-updating pricing data daily, webhooks ensure every price update in ERP (like material cost changes) immediately reflects in your quoting system. This prevents your team from generating quotes based on old info.

Establish the right pricing rules and approval workflows.

One of the biggest advantages of dynamic quoting is automation. But automation without proper guardrails leads to pricing inconsistencies and margin leakage. Setting up rules and workflows prevents rogue discounting, enforces profit margin requirements, and creates consistency across different sales teams.

To streamline approvals, create threshold-based auto-approvals. Instead of requiring manager approval for all discounts, set tiered approval workflows.

For example:

Discounts up to 5%: Auto-approved
5-10%: Requires sales manager approval
10%+ or below cost threshold: Requires finance team approval

You can also allow flexible pricing bands based on factors like deal size, customer history, or competitor benchmarks. This lets sales reps negotiate within a defined range without constantly seeking approvals.

Maximize user adoption with proper training.

A common mistake companies make is assuming that once dynamic quoting is in place, sales teams automatically know how to use it. CPQ is nuanced, so training is key to driving CPQ adoption and getting the most out of the system.

Instead of just doing a software demo, run live sales simulations. Have reps role-play real customer interactions, adjusting quotes in real time based on the system’s recommendations.

You can also implement a leaderboard that tracks how efficiently sales reps use the quoting system. And you could incentives for quick turnaround times, successful upsells, or the most accurate quotes.

Beyond that, sales reps should understand pricing insights to take a solution-oriented approach. For example, if the system suggests a discount based on customer loyalty, reps should explain the value proposition behind it rather than just generating the quote and offering the lower price.

Optimize your pricing with AI and analytics.

To truly maximize the ROI of your CPQ solution, you have to use its analytics and reporting tools to improve your pricing strategy for profitability and conversions.

AI can detect pricing trends, forecast demand, and suggest real-time price adjustments to improve win rates. And trends reports can show you which products are most popular, where you should tweak pricing, which bundles drive the best results, and hundreds of other data points.

You should look at price sensitivity and competitor pricing data. And, to figure out what works best for your product/service specifically, you can use AI to run pricing experiments. For example, test cost-plus pricing vs. value-based pricing in different customer segments to see which leads to higher conversions and better margins.