Who owns pricing? The debate continues!
Our last virtual coffee focused on pricing authority and structure within organizations, discussing various dimensions and models for pricing responsibility across different industries and company sizes.
Participants explored the importance of having a dedicated pricing function, its optimal structure and size, and the need for top management support in pricing decisions. The discussion also covered the impact of the market approach on pricing strategies and regional considerations, and the team concluded with plans for a survey to gather further insights on pricing practices.
Pricing is a critical driver of profitability, yet many companies still struggle to define clear ownership. Should it sit with product management, finance, sales, or a dedicated pricing team? The answer isn't always straightforward, as different industries and business models require different approaches to ensure pricing aligns with strategy and market demands.
We gathered insights from B2B experts across industries to explore different pricing structures, responsibilities, and strategies that lead to success. While some organizations have clear processes, others grapple with internal conflicts over pricing control, leading to inefficiencies and lost revenue opportunities.
Centralized vs. Decentralized Pricing
Some companies centralize pricing to maintain control and consistency, ensuring pricing decisions align with corporate strategy and profitability goals. Others allow business units to adapt pricing based on local market dynamics, providing greater flexibility and responsiveness to regional demand. A hybrid model often works best, combining governance with flexibility, allowing companies to strike a balance between control and market adaptability.
Who Sets the Price?
A structured pricing function is key to avoiding chaos. Product management typically defines the pricing strategy, considering competitive positioning and value perception, while sales negotiate within set boundaries to close deals. Finance ensures profitability by maintaining cost structures and margin integrity. The role of pricing teams is evolving, with some acting as primary decision-makers, setting policies and approvals, while others serve as advisors providing insights and analytics to support decision-making.
The Role of Pricing Teams
Dedicated pricing teams play a crucial role in balancing competitive positioning and profitability. These teams analyze market trends, customer willingness to pay, and competitive landscapes to make data-driven pricing recommendations. Experts agree that pricing is both an art and a science—requiring a combination of data analysis, deep market understanding, and strategic decision-making. Organizations that invest in a specialized pricing function tend to see better financial performance and stronger market positioning.
Top Management Support is Essential
Without leadership buy-in, pricing initiatives often fail to gain traction. Senior management must champion pricing strategies, ensuring governance structures and processes are in place. Strong governance, aligned incentives, and cross-functional collaboration are necessary for sustained pricing excellence. Companies that prioritize pricing as a strategic function rather than an operational afterthought gain a competitive edge in profitability and customer satisfaction.
Size and Structure of a Pricing Team
There's no one-size-fits-all approach when it comes to the size and structure of a pricing team. Smaller companies may integrate pricing responsibilities within product management or finance, whereas larger enterprises often have dedicated pricing functions with specialized roles. The advent of automation and AI-driven tools is reshaping how pricing teams operate, allowing them to handle more complex tasks with greater efficiency. Companies must assess their internal capabilities and market complexity to determine the optimal structure.
Market Approach Matters
Understanding the company's go-to-market strategy is key to defining an effective pricing model. A one-size-fits-all approach rarely works; companies should tailor their pricing strategy based on their market positioning and customer segments. Localized pricing strategies, coupled with a strong framework for decision-making, drive better results by allowing businesses to respond to regional economic conditions, competitive pressures, and customer expectations more effectively. Companies that balance global consistency with local adaptability outperform their competitors in both revenue growth and market penetration.
Some additional resources related to the topics:
1) Results of a survey about who owns pricing https://www.futureup.io/post/poll-results-who-should-own-pricing-in-a-company
2) Share your perspective in the following survey https://app.sli.do/event/6BA6xZFvPZaGhKHqJz1ACX/login?redirect_url=https%3A%2F%2Fapp.sli.do%2Fevent%2F6BA6xZFvPZaGhKHqJz1ACX
Where Does Your Organization Stand?
Does your company have a defined pricing function? If so, who owns pricing? If not, how is pricing managed today? The way an organization approaches pricing can have a profound impact on its profitability and competitiveness. A well-structured pricing function not only supports revenue goals but also enhances customer value perception and long-term growth.
?? Drop your thoughts in the comments! Let's discuss best practices and challenges in pricing strategy.
We hit a record high of 13 participants and plan to continue the discussion in the next meeting. Book your seat and join us: https://bit.ly/VirtualCoffee2025
?? If you're looking to refine your pricing strategy, let's connect! Let's explore how we can optimize your pricing model for better business outcomes.
Want to develop your skills in pricing and you are working in chemicals?
Join the training "Mastering Pricing Pressure in the chemical industry in Frankfurt on Apr 2nd and 3rd.
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