Q&A: What Are the Product Team’s Tasks in Pricing?
Question: Hi Mark, I just enjoyed reading your article on Pragmatic Marketing 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 Product Team’s Tasks in Pricing
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?
**NOTE: Mark Stiving has an active LinkedIn community, where he participates in conversations and answers questions. Each week, he creates a blog post for the top question. If you have a question, head over to LinkedIn to communicate directly with Mark.**
Mark is a pricing expert who helps companies understand value, how to create it, communicate it and capture it. He has a PhD from U.C. Berkeley and an MBA from Santa Clara University, plus 25+ years pricing experience. As an educator, speaker and coach, Mark applies innovative, value-based pricing strategies to guide growth and increase profits for large and small companies.