Who Should Own Pricing?
This is undoubtedly the most common question I get when talking with groups about pricing.? And you’ll hate my answer:? It depends.??
But let’s dive deeper.? Depends on what?? It depends on what part of pricing you’re thinking about.? Pricing is a multi-faceted, multi-departmental, complex topic. It’s no wonder we’re confused about who should own it.?
If you think of pricing as setting prices, which is often the first thing that comes to mind, my strong recommendation is product management or product marketing.? These are the people inside your company (besides sales) who should know the value of your products to your customers.? SaaS companies tend to give it to product marketing.? Hardware and transactional companies tend to use product management.??
Besides price setting, there are many other pricing roles. Larger companies have pricing departments that act as internal consultants.? These can be located anywhere, but often report to finance.?
Pricing includes working with sales to sell value.? After all, if sales can’t sell the value, they end up discounting.? This could be sales enablement, or your marketing department.?
Pricing includes sales escalation policies.? How much discount can a salesperson give?? Who has to approve bigger ones???Usually finance or someone with P&L responsibility makes these decisions.
Pricing includes crafting pricing models, which often go hand-in-hand with molding an optimal product portfolio.? How can you keep it simple enough for buyers to understand and complex enough to capture different customers willingness to pay?? This obviously belongs with whoever directs the development priorities, usually product management or product marketing.
Pricing includes monitoring ASP (Average Selling Price) trends and what’s driving them?? How can you get them to move upward?? Can you quickly detect, diagnose, and fix downward trends?? This fits great in finance, but is often found in sales operations.
Pricing includes designing the pricing page on your website if you have one.?Obviously, marketing owns the web page, but they usually don’t understand creating pricing pages. This could be a role for a pricing person.
领英推荐
Hopefully you can see why the answer to “who owns pricing?” Is it depends.? The best answer is to define the specific tasks and desired outcomes and assign an owner to each one.? Regardless, they should all be working together.? Our goal is to win more business at higher prices.??
Who do you think should own pricing?? What roles did I overlook?
Share your comments below.
Now, go make an impact!
An outcome-focused pragmatist working with U.S and Canada based aftermarket leaders to grow revenue and profits while reducing customer churn
1 年Good article, except it does not cover service/aftermarket. In industrial companies, service accounts for an average of 30% of total revenue. When you consider the large number of spare parts that combine to make the finished product, you can see there are many opportunities to misprice and either leave money on the table or destroy customer value.
Head of Flight Product & Operations at Trip.com
1 年sales team always want low price，so the team（no matter name） which is in charge of balance sales team is owner of pricing
Chief Marketing & Customer Experience Officer | Business Leader | Communications Specialist | Pricing Professional
1 年Mark Stiving, Ph.D. - Very comprehensive. The "competitive analysis" component for pricing is likely under product management, but it can be variable. A multi-million-dollar semiconductor testing machine competitive environment would be managed differently than a USB charger on Amazon.
Pricing Manager at Stryker
1 年Indeed the ownership dynamic varies depending on if you are involved in setting or getting or netting the price.. Pricing is one of the Ps of marketing. Margin management may be seen as finance. How can you get the right value for the product without sales being convinced? I believe Pricing is a collaborative effort between Marketing, Sales and Finance enabled by functions like pricing operations and customer services. Ownership depends on the KPIs we measure. Agree, there is no straight forward answer.
Pricing Consultant & Advisor | Helping manufacturers and wholesalers achieve double-digit margin growth by moving focus from price to value | Speaker | Non Executive Director | M&A Optimisation | Transformation | Interim
1 年Very timely post. Was discussing this only last week with Fiona Brown BSc(Hons), Ana Bibikova ????, Nikhil Kotcharlakota and others. From our discussion we also raised the point around company culture. In a controlling culture finance would probably have final say on pricing whereas in a more collaborative culture, the team approach would work well.