Mastering Amendments in Salesforce CPQ

Best-practice patterns for accelerating existing business

To Land & Expand, You Amend & Extend…

A key strategy for business growth is to expand your footprint with existing customers. In doing so, organizations often need to answer new questions:

• What are the customer’s current subscriptions and their expiration dates?

• How should additional products be priced based on discounts, contracted price, etc.?

• How do you attribute this revenue? 

• How do I structure this data efficiently?

Fortunately, Salesforce CPQ gives us Amendments, a comprehensive framework of tools to facilitate these contract changes, so that your Sales team can remain focused on closing deals and nurturing client relationships rather than getting bogged down with tedious updates.

While all that sounds great on paper and can work quite elegantly when done correctly, Amendments are tough for organizations to get right - especially when they’re not used at all. This ultimately is why this is one of the most common areas where clients need our help, and why we created this guide, which compiles insights, best-practices and practical advice from 100+ CPQ projects. Our hope is that by leveraging these concepts, you can avoid some of the pain other firms have experiences, instead optimizing your customer operations and streamlining expansion revenue.

CONTENTS

> Amendments Overview

> The Value

> Impacts to Consider

> Limitations

> Alternative Strategies

> Noteworthy Best Practices

> Selling Scenario Protocols

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Amendments Overview

If you’re just getting started with Amendments and are unfamiliar with this concept entirely, we’ll kick off here: An Amendment is the idea in Salesforce CPQ that when you sell additional things to an existing customer, you do so by making changes to their existing contract rather than creating a second one. This results in your data + process model typically looking like this:

For more initial context, start here:

• Amendments Help

• Amendments Trailhead

The Value

Why sell this way?

Yes, the framework exists, but why use it? CPQ does not force you to adopt this motion… if you do have the ability to choose your own destiny here, is it actually the right choice? Does it benefit your business? How?

In most cases, YES - largely due to the pain you’re likely to experience later on if you DON’T adopt Amendments, in that customer Assets, Contracts, Subscriptions, Renewals, etc. all will increasingly proliferate and represent a challenging and complex burden to work and maintain. This is illustrated in the diagram below, where you can see what happens when customers make add-on purchases throughout the term of a contract - with and without the Amendment approach.

When organizations adopt this motion, they tend to:

• Improve Customer Experience…
  in that customer has fewer invoices to pay and renewal conversations to have with you.

• Increase Sales Productivity…
  in that renewal owners have fewer opportunities to work and conversations to negotiate for the same amount of revenue.

• Improve Forecasting…
  in that there are fewer deals to track, and any CPQ pricing automation can account for the full customer wallet to calculate accurate pricing.

• Enable Reporting…
  in that Amendments are have different data attributes vs. new sales and leverage native CPQ automation to reference what was previously sold.

• Accelerate CPQ Development…
  in that things like Price Rules are easier to design and develop.

• Empower Future M&A…
  in that organizations focus heavily on cross-selling and product swaps (e.g. you had Perpetual, let’s move to SaaS) with existing customers.

• Facilitate Scale…
  in that these benefits collectively tend to mean you can grow revenue faster than you need to hire headcount.

For these reasons, we almost always encourage organizations to include Amendments in the scope of any initial CPQ implementation - whether at the true MVP go-live, or shortly thereafter. Too often, though, we see organizations exclude this from the initial scope, either because they don’t appreciate the consequences or they keep putting it off in the face of competing priorities.

Impacts to Consider

Those all sound like great benefits, so Amendments must be a no-brainer, right? Well to be fair, selling this way is not without its tradeoffs, and is not always the right choice. Take this example:

SCENARIO
With 5 months remaining on a 12-month contract, customer buys another $100 annual subscription.

NON-AMENDMENT MODEL
The full 12-month subscription is sold. Bookings and billings for this are $1000. On renewal, that add-on is cotermed with the existing contract, for $500 in bookings and billings

AMENDMENT MODEL
The prorated 6-month subscription is sold. Bookings and billings for this sale are $500. On renewal, that add-on is already aligned with the overall contract term, for $1000 in bookings and billings.

Here, you see how the introduction of Amendments, although overall a huge positive (above), does tend to change aspects of how your business “does business”:

• Reduction in initial Bookings

• Reduction in initial Billings, impacting cash flow

• Reduction in the length of initial customer commitment, which represents added risk to future revenue
  

Limitations

We also recognize that despite their appealing proposition, CPQ Amendments are just like any other software in that their architecture isn’t perfect for all requirements and they do have limitations that companies frequently bump up against:

• Date Adjustments
  Amendments don’t work well if you’re looking to change the end date of the existing contract. Also, post-sale adjustments to the Start Date of a Amendment Quote are problematic, as the coterming forces changes to term and prorated price.

• Revenue Classifications
  Upgrading to a Gold tier of your product might need to be classified differently, revenue recognition-wise, vs. buying Gold net new. Attributing this for every individual Line is difficult, and can get out of hand as the appetite for reporting tends to be endless.

• Product Swap Calculations
  Similarly, because there is nothing that natively relates an added Quote Line with the Quote Line it replaced, it’s hard to automate “delta” calculations. Especially when products are often bundled in CPQ, and you’re trying to map many-to-many with products that are apples and oranges anyway.

• Legacy Data
  Companies aren’t born having CPQ already implemented, which means all CPQ companies have customers that pre-date their adoption of the product. Amending pre-CPQ customers requires you transform that legacy data into CPQ’s complex model, which is often incredibly complex and hard to get right.

• Proration
  This isn’t so much a limitation as an area to handle with care. Cloud Giants has an internal slack channel for technical advice called #i-need-help, and it is littered with references to this idea.

If you bump up against these issues, or any others, call us. We don’t have magic wands and can’t promise to help, but at the very least we’re a shoulder to cry on. Don’t suffer alone!

Alternative Strategies

So do really need to adopt Amendments, and how they work out of the box? It’s worth stopping to consider. After all, they are a means to an end, and we should ask if can we accomplish the same outcomes using a different approach.

Option #1: Forego Amendments Entirely, Keep Contracts Separate

This strategy entails selling any add-on business as a standalone Opportunity, and NEVER reconciling contracts downstream.

This is not really a worthwhile option to consider at length. For most organizations, the burden of billing and contract management would quickly get out of hand, decreasing productivity and harming the customer experience. Let’s move on.

Option #2: Forego Amendments Entirely, Merge Contracts at Renewal

This is where we’ve seen most organizations find themselves. The good news here is that CPQ does ship a capability to Renew Contracts from an Account. Beyond that, for those who can’t live with this being a step being manual, you can get fancy and develop custom automation to Use ContractGroup__c field to combine Renewal Contracts. Whichever path you choose, CPQ is able to seamlessly do all your coterming and proration calculations for you, and you end up with a model (assuming you Combine Subscription Quantities) that looks like this:

Ultimately, organizations can get by for awhile with this strategy, but eventually experience too much friction:

• Since automating that Contract Group field is time consuming to configure and extremely difficult to get right, Renewal Quote generation, realistically, always includes a manual step. And that manual step, which relies on additional user training, is particular error prone, with reps frequently selecting the wrong Master Contract and subsequently needing to escalate to Admin/Ops for help. Not great.

• Amendments solve other problems beyond contract reconciliation, and you forego that when you forego Amendments. Specifically, Amendments natively reference prior sales (e.g., Upgraded Subscription field) and impose appropriate guardrails based on those earlier transactions, empowering things like Quote Templates and volume pricing. Without capitalizing on this, organizations tend to suffer with anything from pricing integrity to reporting to customer experience.

Option #3: Amend, but Don’t Coterm Until Renewal

Here’s where things get a bit more interesting.

Most of the downsides outlined above stem from Amendments’ general desire to immediately coterm any add-on sale, which entails reducing the amount of revenue you win at that initial point in time. This gets us wondering if there is a way to adopt Amendments and benefit from them generally without being forced to coterm immediately. What would it look like to book an Amendment for the full subscription term?

This is appealing! Up front, you can reference prior sales, lock in the full customer commitment, book the full amount, invoice for it, keep everything on the same contract, auto-update open Renewal Opportunities, and have CPQ handle proration calculations on the renewal! An amazing compromise!

The rub here is that this is not how Amendments naturally work, and you’d be signing yourself up for complications.

• You couldn’t increase Quantity of an existing Quote Line, since CPQ prevents you from changing the end date. Instead, you would need to add a new line of the same product, breaking the Upgraded Subscription relationship you would otherwise want.

• Dates are already hard to manage in CPQ; they are difficult to get right, and create absolute chaos when you get them wrong. So are your users updating the line-specific End Dates manually? What’s that user experience like? And what happens if they choose the wrong dates? Are you writing Validation Rules or Product Rules to enforce date policies? Or are you creating Price Rules to automatically set the appropriate dates. And you’re sure you’re appropriately handling all edge cases? This is starting to sound really hard.

So ask yourself… is this worth it? Or is this a classic example of “yes this is possible but a year after we develop this insane architecture, we’ll regret it and wish we had just kept it simple.”

Noteworthy Best Practices

Salesforce publishes its own Guidelines for Amending Contracts, which we encourage folks to understand. Beyond those, we find ourselves often recommending organizations adopt the following:

• Renewal Forecasting
  Delay generating the Renewal Quote until <90/120 Days until Contract End Date. This allows you to leverage CPQ’s ghost quote automation that automatically rebuilds open Renewal Opportunities to account for Amendment changes, but which only works pre-Quote.

• Processes & Validations
  Once the Renewal Quote has been created, prevent end users from creating new Amendments against that Contract, but allow any open Amendments to be Won (if this happens, regenerate the Renewal Quote or define some sort of Ops / Deal Desk reconciliation process). This avoids disruption in actual selling and the customer experience - which is the whole point in the first place.

• Tailor the UX
  Leverage CPQ special fields (e.g., EditLinesFieldSetName) to display Amendment-specific information to reps while Quoting.

• Quote Templates
  Create Amendment-specific Quote Templates, to handle slight differences in the data model but to also address the idea that an existing customer might need to see different information in these instances (“how does what I’m buying now relate to what I’ve previously bought?”).

• Consolidating Lines
  Amendments often create multiple Subscriptions of the same product as customers purchase more volume. To simplify renewals downstream, enable the Combine Subscription Quantities setting, but be wary of doing so if you have differently priced subscriptions of the same products while using Same or Uplift renewal pricing methods.

• Renegotiating Pricing
  Amendments should be the tool here, canceling the existing lines and replacing them with new ones. We commonly see companies instead just directly modify the price of existing subscriptions, which is fraught for error.
  

Selling Scenario Protocols

Even though we recommend embracing Amendments, they’re not appropriate to use in every situation, which then of course begs the question. Guidelines for “when to sell a new standalone Contract vs. Amend vs. Renew” are something we advise organizations to align on and document, and that’s where we’ll go next.

Use Case Exceptions

In some ways, we’ll admit this is an odd place to start for a team which is obviously big fans of Amendments… but we’re really just fans of #TheRightSolution. We recognize that in certain situations, it actually does not make sense to consolidate and coterm sales onto a single contract. So before you take our word as gospel later on, check first to make sure these overrides don’t apply:

• Partners/resellers/distributors are involved

• The customer wants different contracts / invoices (to allow payment to come from different budgets)

• Significant customer commitments (6 months left on my existing 1 year contract worth $500, but I can secure a $200,000 annual commitment for 5 straight years today)

• Similarly, the products themselves have different natural cycles and term lengths. Don’t add a “renews every-3-months” subscription to a 2-year contract.

In these instances, it is often beneficial to keep Contracts separate.

Use Cases

Now, finally, here are the common scenarios we see and how we often suggest organizations approach them - assuming they’ve generally adopted the standard Amendment motion and our noteworthy best practices above.

• Increasing Quantity, Same Price

  • Description
    Customer wants to add additional quantity of an existing subscription co-termed within their current contract. 

  • Example
    Customer bought 30 units of Product A in January, and now wants to buy 20 more in June, coterming in December.

  • Approach
    On the Amendment Quote, increase the quantity of the Quote Line to reflect the total they should now own (e.g., the quantity would be 50). Set the Start Date of the Amendment Quote to the date the customer wants the increased subscription to go into effect. 

  • Solution
    This is out-of-the-box behavior for CPQ Amendments. 

  • Consideration
    N/A

  • References
    N/A

• Increasing Quantity, Different Price

  • Description
    Customer wants to add additional quantity of an existing product during an amendment and organization wants to offer a different price.

  • Example
    Customer has 50 units of Product A, which included a 10% additional discount. They now want to buy 30 more units of Product A and take advantage of 15% discount.

  • Approach
    Amend the Contract and a separate Quote Line for the product on the Amendment. Do not adjust Quantity of the original line. Use the Additional Discount field to enter the desired reduction on the new lines.

  • Solution
    Since Price on existing Amendment lines is locked, Renewals are a better point to consolidate Quote Lines and reconcile Discount differences.

  • Consideration
    Unless using the “List” Renewal Pricing Method, separate lines would be created on Renewal which will need to be manually reconciled. This will prompt the breaking of historical “Renewed Subscription” relationships.

  • References
    Combine Subscriptions on Renewal Quotes | Price on existing CPQ Amendment Quote Lines cannot be changed

• Increasing Quantity, w. Discount Schedules

  Item description

• Decreasing Quantity

  • Description
    Customer wants to decrease the quantity of an existing subscription co-termed within their current contract. 

  • Example
    Customer bought 30 units of Product A in January, and now wants to eliminate 10 in in June.

  • Approach
    On the Amendment Quote, decrease the quantity of the Quote Line to reflect the total they should now own (i.e. the quantity would be 20). Set the Start Date of the Amendment Quote to the date the customer wants the reduction in quantity to go into effect. 

  • Solution
    This is out-of-the-box behavior for CPQ Amendments. 

  • Consideration
    If another product is not added on the Amendment Quote, or the quantity of another product is not increased, the Quote will result in a net negative total.

  • References
    N/A

• Adding More Products

  • Description
    Customer wants to add a product within their current contract term so that their subscriptions are co-terminated.

  • Example
    Customer bought Product A in January, and now wants to buy Product B in June.

  • Approach
    Add a new Quote Line for the Product on an Amendment Quote. Set the Start Date of the Amendment Quote to the date the customer wants the new product to be added to the contract.

  • Solution
    This is out-of-the-box behavior for CPQ Amendments. 

  • Consideration
    N/A

  • References
    Amend Your Contracts

• Terminating Products

  • Description
    Customer wants to fully cancel certain or all subscriptions.

  • Example
    Customer bought Product A in January, and now wants to get rid of it in June.

  • Approach
    To terminate a Subscription, reduce the quantity of the amended Quote Line to zero. When you Contract the Opportunity containing that Quote, Salesforce CPQ sets the Terminated Date value of the new Subscription record to one day before the Amendment Quotes start date.

  • Solution
    This is out-of-the-box behavior for CPQ Amendments. 

  • Consideration
    If another product is not added on the Amendment Quote, or the quantity of another product is not increased, the Quote will result in a net negative total. There are likely downstream impacts of termination (e.g., fulfillment, licensing, etc.) that you would want to account for.

  • References
    Terminating Subscriptions

• Adding More Products, Ends Before Contract

  • Description
    Customer wants to add a Subscription that will expire and renew before the current Contract ends.

  • Example
    Customer has 6 months remaining on existing contract, and also wants to now buy a new product that ends in 3 months.

  • Approach
    This should not be handled as an Amendment. Create this as a standalone Quote and Contract with its own term, managed on a separate Renewal cycle.

  • Solution
    In this specific scenario, nothing would prompt the added Subscription to renew on time because the contract being Amended is not yet up for Renewal. This is why, in general, differently-termed Subscriptions should live on different Contracts because their Renewal cycles will be different.

  • Consideration
    Customer will have separate Contracts in perpetuity, unless they decide to co-term in the future. You may also need to adjust reporting to correctly capture this as Add-On/Expansion/Upsell/Cross-Sell/etc.

  • References
    Guidelines for Renewing a Contract with Multiple Subscription End Dates

• Renewing Early, Keeping Same Dates

  • Description
    Customer wants to renew a Contract early before the current Contract expires, but keep their renewal dates the same.

  • Example
    Customer has a January - December renewal cycle. Sales negotiates and closes the Renewal in August. The renewal cycle stays as January - December.

  • Approach
    Not an Amendment! Instead, sales submits a Case to “Ops” to generate a Renewal Quote from the Contract. Sales then works the Renewal Quote as normal, and can close early.

  • Solution
    This works out-of-the-box and does not rely on any custom configuration.

  • Consideration
    Ensure any downstream processes (e.g., provisioning) are able to hande this.

  • References
    Renew from the Contract Record

• Renewal Early + Upselling

  • Description
    Customer wants to add a product and renew a Contract early before the current Contract expires.

  • Example
    Customer has 4 months remaining on the existing contract. They want to buy a new product, and have that go into effect now. Sales uses this as an opportunity to secure the existing renewal early.

  • Approach
    Generate the Renewal Quote, and add the new Product. Update that Quote Line’s Start Date to “Today,” increasing the Term (e.g., to 16 months). Keep all the other Start Dates the same.

  • Solution
    This works out-of-the-box and does not rely on any custom configuration. The Subscription Term field you’ve already set on the Product will cause future renewals to revert back to the standard term.

  • Consideration
    This requires the customer to pay for the partial + full term at the same time. There will be a period during which Subscriptions on both the current and the renewal contract will be Active at the same time.

  • References
    Renew from the Contract Record | Subscription Terms

• Expanding, Ending After Contract

  • Description
    Customer wants to add a subscription that renews after the current contract ends. These add-ons have the same standard term length as the current subscriptions.

  • Example
    Customer has 6 months remaining on existing contract (Product A), and also wants buy a new Product B that ends in 12 months. Sales does not want to coterm to the current contract because they can book the full 12 months of Product B now.

  • Approach
    This is the scenario outlined in Alternative Option #3 above. This should potentially (1) not be allowed to instead immediately coterm, (2) prompt creating a new contract or (2) be handled by adding a Quote Line for the Product on an Amendment Quote, and somehow override the default coterming of that specific Quote Line by adjusting its End Date to the full term.

  • Solution
    While CPQ will natively consolidate and prorate out of the box downstream, adjusting End Dates is error-prone when done without automation or guardrails. If you choose to do so, develop Product Rules or Price Rules to minimize risk.

  • Consideration
    Amendment & Renewal Behavior needs to be kept as Earliest End Date. Billing timing for the Renewal subscriptions will no longer match.

  • References
    Guidelines for Renewing a Contract with Multiple Subscription End Dates | Guidelines for Amending from a Contract with Multiple Subscription End Dates

• Renewing, + Changing Dates

  • Description
    Customer wants to Renew the current Contract and change to a different Renewal Date moving forward.

  • Example
    Customer has a March - February renewal cycle, but wants to move to a January - December renewal cycle.

  • Approach
    Do not use Amendments. Instead, on the next Renewal, pull forward or push out the End Date of the Quote to realign the customer’s renewal cycle.

  • Solution
    This works out-of-the-box and does not rely on any custom configuration. The Subscription Term field you’ve already set on the Product will cause future renewals to revert back to the standard term.

  • Consideration
    Ensure any downstream processes (e.g., provisioning) are able to handle this. Also, adjusting the End Date of a Renewal will reduce revenue to the prorated portion being sold.

  • References
    Renew from the Contract Record | Subscription Terms

• Swapping Products Mid-Contract

  • Description
    Customer wants to add a product to replace a product that they currently have.

  • Example
    Customer has Product A, but wants to replace it with Product B.

  • Approach
    Amend the Contract, and reduce the existing product’s Quantity (to 0, for full replacement). Add the new product to the Amendment quote.

  • Solution
    This out-of-the-box approach will create two new subscription records against the Amended Contract, for both the upsell product as well as the replaced. The added “replacement” Subscription will have a negative quantity, based on the delta between original and new quantity.

  • Consideration
    There is no standard  process to indicate which product was replaced and why. While it is possible to enable a link from new back to former, creating automation is complex for a one-to-one swap, and even more fraught when linking bundles. 

  • References
    N/A