How to Shift Pricing Ownership in Your Company (or Not)

The question of "pricing ownership" in a B2B organization can be a real head-scratcher and as discussed in my previous article, “Who Should Own the Pricing Operations in Your Company?”, the frustrating yet truthful response is one that sometimes sounds like a lame excuse "It depends." Possibly, the answer might fall to a single department, leading to a siloed approach that hinders strategic pricing success. However, it is important to acknowledge that a complete overhaul isn't always the answer either. Sometimes, your current ownership structure might already be on the right track. This article explores the complexities of moving pricing’s ownership across departments in your organization, offering guidance on when a collaborative approach shines and when a ‘reinventing the wheel’ shift for the responsibility of pricing might not be necessary.

At Pricefx, we know that cloud-native pricing software solutions can make an enormous difference for our B2B customers that are looking to successfully implement their pricing strategies and power them with data-driven decision making. We have been in this business for more than a decade, and we have seen that every customer has their own story and company culture and with that, their own unique place for pricing in their organization.

In this article, we examine the reasons why you might consider pricing a multi-department responsibility, why you might want to move pricing from its current home in your company (or not), and why a ‘one-size’ fits all approach to the responsibility for pricing might not be ideal.

B2B Pricing: Why Pricing’s Ownership Isn't Always Black and White

B2B pricing is a sophisticated waltz, requiring a harmonious interplay of diverse expertise from various departments. Product teams understand the intrinsic value proposition of your offerings and the nuances of customer needs. Finance keeps a watchful eye on profitability and ensures pricing strategies align with financial objectives. Sales bridge the gap between value perception and customer acquisition, effectively communicating the worth of your products or services.

Each department brings a unique perspective, and (for some companies) fragmenting ownership might create blind spots that hinder the development and evolution of pricing.

Furthermore, B2B markets are dynamic and ever-evolving landscapes. Customer expectations may shift, competitor actions can necessitate swift adjustments, and market fluctuations demand constant adaptation. A single department might at times lack the agility required to navigate this dynamic environment and respond effectively to these ongoing changes.

Finally, pricing should be a strategic lever that aligns with broader organizational goals. A siloed ownership structure can make it difficult to ensure pricing strategies contribute to the achievement of these overarching objectives.

Moving or Staying Put? Assessing Your Pricing Landscape

There is no single "correct" answer to the ownership question. The ideal model for your organization hinges on a nuanced understanding of your specific situation. Here are some key considerations to guide your evaluation:

• The Performance Meter: Take a critical look at your current pricing performance. Are you achieving your desired profit margins and customer acquisition goals? Is your pricing strategy attracting the right kind of customers and generating sustainable recurring revenue streams and growth?
• The Collaboration Compass: Do sales, marketing, and product development work together seamlessly on pricing initiatives? Is there a shared understanding of the pricing landscape and its impact on the organization as a whole?
• The Business Structure Barometer: Consider the complexity of your business structure. Do you have diverse product lines, cater to distinct customer segments, or utilize intricate pricing models? A more complex structure might necessitate a collaborative approach to ensure consistency and effectiveness across various offerings.

If your analysis reveals room for improvement on any of these fronts, a collaborative ownership model might be the key to unlocking greater pricing success.

Strategies for Shared Pricing Success

A collaborative ownership model, when implemented effectively, can be a powerful driver of strategic and adaptable pricing. Here are some key steps to ensure a smooth transition and foster a culture of shared ownership:

• Defining Roles and Responsibilities: A clear delineation of roles and responsibilities is crucial. Outline the specific tasks and desired outcomes for each department involved in the pricing process. This prevents confusion and ensures everyone understands their part in the overall pricing strategy.
• Establishing a Pricing Steering Committee: Form a cross-functional team with representatives from key departments (product, sales, finance, etc.). This committee will serve as the central decision-making body for pricing strategy, ensuring diverse perspectives are incorporated into pricing decisions. But it will need strong leadership from a potent Executive Sponsor in your organization and an empowered Solution Manager.

• Investing in Cross-Functional Training: Educate departments on broader pricing concepts. This can involve workshops, training sessions, or knowledge-sharing initiatives that foster a shared understanding of the pricing landscape and its impact on the entire organization.

• Share Results: Provide real-time data and key performance indicators (KPIs) related to pricing. This transparency allows everyone to see the impact of their actions on overall pricing performance, drives user adoption of your pricing software solution and fosters a more company-wide data-driven approach to pricing decisions.
• Embracing Open Communication and Feedback Loops: Encourage open dialogue about pricing across departments. Actively solicit and incorporate feedback from various stakeholders, such as sales representatives, product managers, and customer support teams. This feedback loop ensures that pricing strategies are informed by real-world customer insights and market dynamics.

The Case for a Single Department to Run Pricing

In some cases, maintaining the single department pricing ownership structure can offer significant efficiency advantages.

A well-defined ownership model, particularly when housed within a single department with deep pricing expertise, can streamline decision-making processes. Clear lines of responsibility ensure there is no finger-pointing or delays when pricing decisions need to be made.

Furthermore, a centralized ownership structure can foster a culture of accountability. The department responsible for pricing will be laser-focused on achieving pricing objectives and will have the necessary autonomy to implement strategies that drive success. This fosters a sense of ownership and a commitment to continuous improvement within the pricing function.

Focus and Expertise: Leveraging Deep Knowledge

There's immense value in having a dedicated team or department with in-depth pricing knowledge. When pricing ownership resides within a department with this expertise, it allows for a focused and strategic approach to pricing. The team can stay abreast of the latest pricing trends, conduct thorough competitor analyses, and develop pricing models tailored to your specific market and customer segments. This deep understanding of the pricing landscape ensures your organization is well-positioned to capitalize on new opportunities and respond effectively to market shifts. Furthermore, a centralized team can act as a central hub for pricing knowledge, providing guidance and support to other departments across the organization.

Recognizing When Your Existing Pricing Structure Works

If it isn't broken, you may not need to fix it. At least not right now anyway. Here are some indicators that your current pricing responsibility structure might already be on the right track:

• A Track Record of Success: Your pricing strategy is delivering consistent results, achieving profit goals, and attracting your target customers. There is no need to fix what isn't broken if your current ownership model is demonstrably effective.
• The Synergy Symphony: Departments already work together seamlessly on pricing initiatives. There is a shared understanding of the pricing landscape and its impact, fostering agile decision-making and a unified approach to pricing strategy. Open communication and collaboration are the norm, not the exception.
• A Streamlined Structure: You have a well-defined product line, a focused customer segment, and a straightforward pricing model. In these scenarios, a centralized ownership structure, perhaps residing within a department with deep pricing expertise (e.g., product management or a dedicated pricing team), might be perfectly efficient. There is less need for extensive cross-departmental collaboration when the pricing landscape is relatively uncomplicated.

It is important to remember that the ideal ownership model is not static.

Pricing never has and never will be a ‘set-and-forget'.

As your business evolves, so should your approach to pricing ownership too.

Staying Future-Proof: Embracing Change and Continuous Learning

Here are some key considerations for ensuring your pricing strategy remains adaptable and effective in the long run:

• Data analytics tools and artificial intelligence (AI) enhanced pricing software solutions like Pricefx are revolutionizing the B2B pricing landscape. These technologies offer deeper customer insights, enable dynamic pricing models, and automate repetitive pricing tasks enroute to increasing margins and swelling company bottom lines. Be prepared to adjust ownership structures as technology disrupts (and improves upon) your traditional manual pricing efforts, while also considering:
• The Pricing Audit: Conduct regular pricing reviews and audits to assess the effectiveness of your current strategy. These evaluations may reveal the need for adjustments in ownership responsibilities as your business and the market evolve.

For example, if you enter a new market segment with a complex pricing model, a more collaborative approach might be necessary to ensure successful implementation.

• The Knowledge Curve: Promote continuous learning about pricing best practices and industry trends. Encourage your team to attend industry conferences, subscribe to relevant publications, and participate in online communities focused on B2B pricing. This ongoing learning ensures everyone involved in the pricing process has the latest knowledge and insights to contribute to informed pricing decisions.

Finding the Perfect Home for Your Pricing Operations

The ideal place where your company’s B2B pricing resides depends on your specific circumstances. There is no one-size-fits-all solution.

A well-functioning existing structure, particularly in a less complex business environment, can be just as effective as a collaborative model.

However, if your current approach is hindering pricing effectiveness or you operate in a dynamic market, a collaborative approach can unlock significant benefits.

Remember, the goal is not simply to move ownership, but rather to find the approach that maximizes your organization's pricing potential.

By fostering a culture of continuously reconsidering and adapting your approach (if necessary), you can ensure your B2B pricing strategy remains a powerful driver of sustainable business growth.

To learn more about managing change and how in applies to pricing in the organizational environment, check out this useful article below to learn more:

Meanwhile, Happy Pricing!