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Episode #0003 - Where Is Pricing Set In 2020?
In this episode of Pricing College - Aidan and Joanna discuss where pricing is actually set by companies in 2020.
Most smaller companies - i.e. with revenue below $100m per annum do not have dedicated pricing teams - and this is perfectly understandable.
Pricing is often set somewhere such as finance, marketing, the sales team or sales reps, merchandising or commercial departments.
Whilst none of these approaches are automatically wrong - we ask - do you know where pricing is set?
______________________________________________________________________
Following from the last introductory episode on what is pricing, we want to discuss in 2020, Where is the pricing function in most companies? Where is the pricing set?
Well, A lot of companies don't even have a pricing function. Pricing still can be set anywhere around the business, commonly we see prices being set by sales teams. A lot of prices are also set by finance, possibly marketing, and in retail businesses we've seen prices set in merchandise by category managers, and even merchandise managers. A handful of businesses do have an actual dedicated pricing function.
We need to state that realistically most companies certainly smaller companies probably won't have a dedicated pricing function. And that's perfectly fine, but when you're starting on a journey of examining your pricing, working out whether you're doing a good or bad job, just even asking the questions to start with, who sets the prices? It’s not always as easy and answers as you might expect.
To have a dedicated pricing function, you're talking about a business with revenues over 100 million-plus so yes, you're right Aidan. If you're a small business, you can't invest in a pricing team but you can invest in your understanding of pricing, educating yourself on some of the skills and the tools that big businesses use. That is why we're having this podcast for everybody.
To begin with, Where in your company prices are set? The next question is, why are they being set in that way? And then a third question will be, are these people incentivised to do it correctly? to help the company? or are they confident? and are they interested? Those are deeper questions that will obviously require more thought but just even asking the first question in your company, who sets the price?
Often we've seen in businesses that do have a dedicated pricing function. But the real pricing manager may not be the pricing manager, it might be the sales manager, the finance director. Pricing does touch on a lot of disciplines, it crosses many different teams, but you kind of mean a centralised hub of the pricing team to manage not control pricing but, managing pricing. So that everybody knows where they're at and where they need to go.
I always think the mark of a good pricing manager or even not requiring that job description but the person in charge of pricing, the need to work with other departments is key to understand what the company does, the operations, the value provided to customers, who the customers are, and work with the marketing department. There's no point in launching a marketing campaign if you're not tracking the dollars coming back. It's someone who works with, whether there is a dedicated resource or whether they're a shared resource among departments or whoever they report to. They need to be aware that there are so many stakeholders in the company that they have to work with and understand.
One of the best pricing managers aren’t just like spreadsheet technicians, they get out from behind their desk, and they work with stakeholders to improve skills, educate people on price, listen to key challenges, and try to find practical solutions to businesses problems and connects different teams to the market.
I think we will end this podcast today with a question to you the listeners. In your company, who sets the pricing?
There's no right or wrong answer here if you haven't got it. It does depend on the maturity of the business if you haven't got pricing formalised pricing discipline or process set. Then discretionary pricing is very commonplace, but you can take steps and learn new skills to improve that process no matter who you are.
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By Joanna Wells and Aidan CampbellIn this episode of Pricing College - Aidan and Joanna discuss where pricing is actually set by companies in 2020.
Most smaller companies - i.e. with revenue below $100m per annum do not have dedicated pricing teams - and this is perfectly understandable.
Pricing is often set somewhere such as finance, marketing, the sales team or sales reps, merchandising or commercial departments.
Whilst none of these approaches are automatically wrong - we ask - do you know where pricing is set?
______________________________________________________________________
Following from the last introductory episode on what is pricing, we want to discuss in 2020, Where is the pricing function in most companies? Where is the pricing set?
Well, A lot of companies don't even have a pricing function. Pricing still can be set anywhere around the business, commonly we see prices being set by sales teams. A lot of prices are also set by finance, possibly marketing, and in retail businesses we've seen prices set in merchandise by category managers, and even merchandise managers. A handful of businesses do have an actual dedicated pricing function.
We need to state that realistically most companies certainly smaller companies probably won't have a dedicated pricing function. And that's perfectly fine, but when you're starting on a journey of examining your pricing, working out whether you're doing a good or bad job, just even asking the questions to start with, who sets the prices? It’s not always as easy and answers as you might expect.
To have a dedicated pricing function, you're talking about a business with revenues over 100 million-plus so yes, you're right Aidan. If you're a small business, you can't invest in a pricing team but you can invest in your understanding of pricing, educating yourself on some of the skills and the tools that big businesses use. That is why we're having this podcast for everybody.
To begin with, Where in your company prices are set? The next question is, why are they being set in that way? And then a third question will be, are these people incentivised to do it correctly? to help the company? or are they confident? and are they interested? Those are deeper questions that will obviously require more thought but just even asking the first question in your company, who sets the price?
Often we've seen in businesses that do have a dedicated pricing function. But the real pricing manager may not be the pricing manager, it might be the sales manager, the finance director. Pricing does touch on a lot of disciplines, it crosses many different teams, but you kind of mean a centralised hub of the pricing team to manage not control pricing but, managing pricing. So that everybody knows where they're at and where they need to go.
I always think the mark of a good pricing manager or even not requiring that job description but the person in charge of pricing, the need to work with other departments is key to understand what the company does, the operations, the value provided to customers, who the customers are, and work with the marketing department. There's no point in launching a marketing campaign if you're not tracking the dollars coming back. It's someone who works with, whether there is a dedicated resource or whether they're a shared resource among departments or whoever they report to. They need to be aware that there are so many stakeholders in the company that they have to work with and understand.
One of the best pricing managers aren’t just like spreadsheet technicians, they get out from behind their desk, and they work with stakeholders to improve skills, educate people on price, listen to key challenges, and try to find practical solutions to businesses problems and connects different teams to the market.
I think we will end this podcast today with a question to you the listeners. In your company, who sets the pricing?
There's no right or wrong answer here if you haven't got it. It does depend on the maturity of the business if you haven't got pricing formalised pricing discipline or process set. Then discretionary pricing is very commonplace, but you can take steps and learn new skills to improve that process no matter who you are.