Who Should Own the Pricing Operations in Your Company?

The question of ownership of the internal pricing operations and which department of any B2B organization takes responsibility for it often elicits a frustrating yet truthful response that sometimes feels like a cop-out: “It depends.”

While this answer may seem unhelpful (regardless of whether you are a distribution, chemical, or manufacturing business) a deeper dive reveals the intricate and multi-faceted nature of B2B pricing, encompassing numerous roles and departments. Instead of seeking a singular owner, companies should sometimes consider a collaborative approach, weaving a tapestry of expertise from various areas to achieve successful pricing strategies.

Here at Pricefx, we have spent more than a decade helping our B2B customers execute their pricing strategies successfully with the help of our cloud-native pricing software solutions, and we have experienced first-hand that each of our customers are unique and where pricing sits in each of their organizations is no different.

In this article, we look at the various departments that are touched by pricing in their operations and how that occurs, before analyzing the collaborative symbiosis that most organizations might seek in their quest for pricing perfection and tips for how to make that a reality.

In the intricate realm of B2B pricing, the question of who should own pricing operations is not a one-size-fits-all scenario. Instead, it hinges on the unique organizational dynamics and structures within each company.

Let’s delve into the specific areas of pricing expertise and functionality specialization, and provide examples of how each might contribute (remembering there are no right or wrong answers where the final responsibility for pricing rests within any type of business) to determining the department that might be the optimal choice for housing pricing operations within your organization;

Potential Pricing Owner – Product Management or Product Marketing

In many organizations, these teams take the lead in setting prices, leveraging their deep understanding of customer needs and the value proposition of products or services. They navigate the delicate balance between delivering value and maintaining competitiveness in the market.

Potential Pricing Owner – Dedicated Pricing Departments

Larger companies often establish specialized pricing departments that function as internal consultants. While these departments may report to distinct functions such as finance, they play a pivotal role in orchestrating a cohesive pricing strategy across the organization.

Potential Pricing Owner – Sales Enablement Teams or Marketing

Collaborating closely with the sales team, these departments ensure effective communication of the value proposition to potential customers. By equipping sales personnel with the tools and knowledge to articulate value, they help mitigate the need for excessive discounting.

Potential Pricing Owner – Finance or Profit-and-Loss (P&L) Responsibility

Responsibility for defining discounting authority often falls within the purview of finance teams or individuals with P&L responsibility. They establish sales escalation policies to maintain price discipline and safeguard profitability.

Potential Pricing Owner – Product Management or Product Marketing

Crafting pricing models involves aligning product development priorities with pricing strategies. These teams balance customer comprehension with capturing diverse customer willingness to pay (WTP) to optimize pricing models.

Potential Pricing Owner – Finance or Sales Operations

Closely monitoring average selling price (ASP) trends and identifying driving factors are vital for successful pricing strategies. Finance teams or sales operations analyze market dynamics and make proactive adjustments to optimize pricing.

Potential Pricing Owner – Marketing or Pricing Specialists

Crafting user-friendly pricing pages that effectively communicate value is crucial for companies with online presences. While marketing departments typically oversee webpage design, pricing specialists contribute their expertise to ensure clarity and effectiveness.

By now, it should be clear that the answer to “who owns pricing?” is not a simple one. Instead of searching for a single owner, the most effective approach often lies in defining specific tasks and desired outcomes, assigning responsible individuals or departments for each, and fostering collaborative communication across all stakeholders.

This collaborative approach, akin to weaving a tapestry, requires active participation and communication from various departments:

• Product Management and Marketing:  Providing deep insights into customer needs and value propositions.
• Sales:  Effectively communicating value and maintaining price discipline through established discounting policies.
• Finance:  Contributing financial expertise for monitoring trends, analyzing profitability, and setting pricing boundaries.
• Pricing Specialists (if applicable):  Offering specialized knowledge and expertise in areas like crafting pricing models and designing effective pricing pages.

By harnessing diverse expertise and perspectives across various functions, companies can create a robust and adaptable pricing strategy that delivers long-term success.

While defining roles and responsibilities is crucial, fostering a  culture of shared ownership  around pricing takes this collaborative approach a step further. This empowers individuals across the organization to actively contribute to pricing discussions and initiatives. This cultural shift can be achieved through:

• Cross-functional training sessions:  Organizing workshops or training sessions that educate different departments on the various aspects of B2B pricing. This fosters a shared understanding of the pricing landscape and its impact across the organization.
• Implementing pricing dashboards and metrics:  Providing real-time data and key performance indicators (KPIs) related to pricing performance allows everyone to stay informed and understand how their individual actions contribute to the overall pricing strategy.
• Encouraging open communication and feedback loops:  Creating a culture where open dialogue is encouraged and feedback from various departments is actively sought and incorporated into the decision-making process.
• Celebrating pricing wins: Recognizing and celebrating successful pricing initiatives, not just in sales or revenue teams, but across all departments involved in the process. This reinforces the value of collaborative efforts and motivates individuals to contribute actively.

As customer expectations evolve, technological advancements emerge, and market dynamics shift, the ownership of B2B pricing operations may need to adapt accordingly. This necessitates continuous learning and a willingness to embrace flexible pricing ownership structures. Here are three key aspects to consider:

Keeping abreast of the latest trends and best practices in B2B pricing can inform how ownership structures evolve within your company. Attending industry conferences, subscribing to relevant publications, and participating in online communities equips all stakeholders with valuable insights. This shared knowledge base empowers informed decision-making about potential shifts in ownership responsibilities as the B2B landscape transforms.

Data analytics tools and AI not only offer deeper customer insights for informed pricing decisions, but also open doors for potential changes in ownership structures. As AI automates repetitive tasks and provides recommendations for dynamic pricing models, the roles and responsibilities associated with pricing operations may evolve. This may require a reevaluation of ownership and a potential shift towards individuals or teams best equipped to handle the complexities of AI-driven pricing strategies.

Regularly evaluating the effectiveness of existing pricing strategies and conducting pricing audits help identify areas for improvement, potentially leading to adjustments in ownership structures. By objectively analyzing the success of current ownership models, companies can determine if specific tasks or responsibilities should be shifted to different departments or individuals based on their expertise and capabilities.

By taking on multiple owners of pricing across departments, then establishing the coordination of all those efforts under a ‘Pricing Steering Committee’ will be optimal.  You will require a powerful ‘C’ level representative on that committee as an Executive Sponsor plus a Solution Manager or Director in order to ensure that one of the owning groups does not have too much say in addition to setting the rules for what happens when:

• If the rules need to be varied
• If the rules are disregarded
• If there is an impasse between the various owners on a pricing decision

Without speaking to the co-ordination of these efforts, then the distinct teams identified are left to ‘battle it out’ and potentially leave the end users (salespeople and customers) confused and disenfranchised.

No department wants to admit they do not own the pricing and, from a customer perspective, as the prices they get from salesperson ‘x’ vary from salesperson ‘y’ and from when they call in to place orders, there is no ‘coordinated’ and identical answer clearly available within the pricing software / system that is governed by consistent rules.

The level of pricing maturity within an organization significantly influences the internal ownership structure of pricing functions.

In essence, in most cases the degree of pricing maturity within an organization dictates the level of internal ownership and strategic integration of pricing functions.

Less mature organizations tend to compartmentalize pricing responsibilities within specific departments, while highly mature organizations embrace a centralized approach led by a dedicated pricing team at the C-level.

This evolution in pricing maturity underscores the importance of aligning pricing strategies with broader organizational goals and highlights the pivotal role of effective pricing leadership in driving sustainable business growth and profitability.

By recognizing that pricing is often not a singular responsibility, but rather a collaborative tapestry woven from the expertise of various departments, companies can unlock sustainable success in the B2B landscape.

But how other than the Pricing Steering Committee we have discussed above; how do you get several different departments dedicated and united in using pricing software to weave the tapestry altogether? Check out this article on pricing software user adoption to learn more:

Meanwhile, Happy Pricing!