Q&A: What Are the Product Team's Tasks in Pricing?
Question: Hi Mark, I just enjoyed reading your article on pragmaticmarketing.com about why Product prices a product. I was curious what that really means though - does that mean Product develops agreement/contract length, go to market model and things like the terms + conditions? Would love your input - Alex
Answer: The challenge is defining what it means to “price a product”. Most people, when thinking of who owns pricing, think about who sets the list price. Definitely product teams should do this. They are typically the only ones who understand the value of the product (besides sales?).
The problem is, as your question points out, there are so many other aspects to "pricing". You mentioned contract length, go to market models, and terms and conditions. Here are several more off the top of my head: sales discount authority, escalation process, negotiations, quoting, promotions, monitoring, pricing model, and offer packaging. There are tons more.
Pricing, from a big picture, belongs to many people. If you look at the list above, different people probably own different parts. Sales, marketing, and finance all play a big role. The real key is being explicit about which person/department owns which role. Often, who owns which part is less important than knowing that someone owns it.
That said, here is a reasonable way to think about it.
Product teams should own anything where knowing the value of the product, including the competitive landscape, is critical.
Sales should own the pieces that require frequent interaction with the buyers. They should learn about value from the product teams.
Finance should own the pieces that require monitoring results and reporting anomalies.
To be fair, these are the first time I’ve written those generalizations, so they are subject to deeper thought and suggestions. Yet they seem reasonable. What do you think?
Commercial Leadership| Revenue Growth Management| Sales | Digital Acceleration|
5 年to reflect the brand positioning in it's price offering.
As a pricing specialist I help companies grow their revenues and profits with winning pricing strategies aligned to business objectives
5 年I'd suggest pricers have just as much responsibility as product teams to know what the value of the product is for their customers, and therefore there should ideally be "equal ownership" through some kind of Product & Pricing steering group or committee. Product & Pricing teams should be working hand in hand to define and capture value otherwise it becomes too siloed.?
Assisting B2B-OEM leadership to grow profits supplying Installedbase: Capability, Longevity, Availability and Productivity Solutions [I:CLAPS].
5 年It often depends on who has skin-in-the-game regarding pricing. If a product manager has P&L responsibility for his/her product line, then it is the product manager. Note that I have spent much efforts in this area with clients. Because a product line can be overseen by many, from manufacturing, to sales, to marketing and others, there needs to be a managerial financial reporting system that aggregates a product lines costs and revenues, to create a virtual? P&L for the product manager; that will drive his/her bonuses, but will not impact the bonuses of others....this can get to be pretty ugly intracompany infighting if not executed well.?