Technology companies seem to have an extraordinary amount of suffering when it comes to making pricing decisions. Everyone has a pricing committee; and no one loves it. Effective pricing policies really do require lot of cross-functional input and viewpoints, but many organizations struggle to establish and maintain a solid process for making decisions. Based on my experiences, both good and bad, here are my recommendations for transforming your pricing committee from the Simpson household to something better.
1. Nominate a strong moderator Since pricing decisions can generate strong emotional undertones, it is sometimes difficult for the person making pricing recommendations to serve as leader of a pricing committee. Depending on the nature and size of your organization, a VP of Marketing or Product Marketing might serve as a more neutral “referee”. This person should work to get everyone’s viewpoint recognized while encouraging the committee to work towards a decision. In addition, this person should take responsibility for keeping the key stakeholders committed to participating in the process.
2. Get cross-functional representation up and down the organization Pricing policy changes can affect a number of functional areas: Sales, Marketing, Legal, Finance and even Support. Not only is it necessary to include leaders from every area in the pricing committee, but it is also useful to bring in people from different layers of the organization. An individual sales rep or district manager may have perspectives that don’t completely filter up the organizational hierarchy.
3. Start and finish pricing projects as a team While the members of a pricing committee typically have many demands on their time, discussing a pricing decision up front, even before Product Marketing’s research begins, could save time in the long run. Asking the right questions gets everyone to the right answers more quickly.
4. Keep it as short as possible Meeting length and meeting attendance rates seem to be inversely correlated. Distributing proposals in advance, having lengthier mid-process discussions with smaller groups of stakeholders, and sticking with a clear agenda reduce meeting time significantly.
5. Be clear about how decisions get made The U.N. Security Council serves as a good model for this. Everyone should have a say, but not everyone has veto power.
6. Maintain continuity Pricing decisions tend to peak around the time of a product launch. The pricing committee may struggle to come together for the crunch time, only to fall apart and then be resurrected too late to make the next critical set of decisions run smoothly. While no organization wants to force unnecessary meetings on its members, the pricing committee should work as a standing body even when its decisions aren’t time critical. Even if it doesn’t make sense to have live meetings at every scheduled time, you could encourage continuity by sending out an e-mail update in lieu of the meeting.
7. Treat every initiative as a learning opportunity Functional families can share their ideas honestly and openly and learn from their mistakes. Pricing committees need to do the same thing after every major initiative. With an effective post-mortem process, your committee can build on
Posted on Mon, January 11, 2016
by Linda Sonne