What We Know:
Pricing Ownership Within the Organization
The question of who should own pricing is often debated. Traditionally, the Product Marketing function has been responsible for setting prices. However, there is a growing consensus that pricing should be a cross-functional decision involving multiple departments, including Product Management, Sales, and Marketing to ensure a cohesive GTM strategy.
Who Should Set the List Price?
The question of who should own pricing is often debated. Traditionally, the Product Marketing function has been responsible for setting prices. However, there is a growing consensus that pricing should be a cross-functional decision involving multiple departments, including Product Management, Sales, and Marketing to ensure a cohesive GTM strategy.
The list price is the price that is advertised for a product or service. It is typically set by Product Management or Product Marketing, as these teams have the deepest understanding of the product's value proposition.
Who Should Negotiate the Price?
The price that a customer ultimately pays is often negotiated by Sales. However, Product Marketing and Customer Success can play a role in providing sales teams with the information they need to negotiate effectively.
Who's Running the Deal Desk?
The deal desk is responsible for managing the pricing process for all deals. This team typically includes representatives from Product Marketing, Sales, and Finance.
Where There’s Room to Grow:
The Common Mistake of Not Focusing on Customer Growth
Many companies make the mistake of focusing solely on acquiring new customers and retaining existing customers. However, it is also important to focus on growing the value of existing customers. This can be done by encouraging customers to upgrade to higher-priced plans or by increasing their usage of the product or service.
The Normalization of Usage-Based Pricing
Usage-based pricing is a model in which customers are charged based on their usage of a product or service. This model is becoming increasingly popular, especially for SaaS companies.
The Superseding Role of Customer Value Management
As usage-based pricing becomes more common, the customer value management (CVM) role supersedes the customer success (CS) role. This is because CVM is focused on maximizing the value that customers receive from a product or service, while CS is focused on ensuring that customers are successful in using the product or service.
The Need for Continuous Value Creation
In today's competitive market, customers can easily switch to a different provider if they are not satisfied with the value they are receiving. This means that companies need to be constantly creating value for their customers. This can be done by adding new features, improving existing features, or providing better customer service.
Every Department Has a Role to Play
Driving greater value and adoption is not just the responsibility of the CVM team. Every department at the company has a role to play. Product Marketing can help by creating compelling value propositions, Sales can help by selling the value of the product or service to customers, and Marketing can help by educating customers about the value of the product or service.
Pricing is a complex issue that requires careful consideration. With the right strategies in place, you can develop an effective pricing strategy that will help you maximize your company's revenue and profitability. For more on these topics and strategies, listen to the full episode of The Marchitect here.
