Who owns pricing? Product Marketing or Product Management? If both, how do you divide the responsibilities?
The answer really varies by company - I have seen instances of Product Marketing, Product Management, Finance, Biz Ops, and Sales Strategy teams own pricing.
In an ideal world, the team that's both tasked with understand your products/market/customers and works closely w/ Sales is the best place to lead pricing initiatives. In most instances, I'd argue that this is Product Marketing. Product Management are important stakeholders in the process (along with teams like Sales and Finance) but since they are not as GTM focused as PMM in most cases I don't think they are in the best position to lead pricing efforts.
Great question with the most votes. In my experience, Product Marketing owns a large percentage of the market analysis, pricing and packaging effort. At VMware, Product Marketing works hand in hand with Product Management, executive staff, finance and sales to carve out pricing for new and incremental offerings. We split pricing related responsibilities in the following way.
Customer & market intelligence i.e. customer segmentation, addressable market, competitve insights and analyst research
Pricing & packaging i.e. product price points, bundling, tiering and discounting
Sales enablement i.e. how is the product priced, deals structured and overcoming any sales objections
Product line tiering i.e. features ABC available to customer segment 1 and features XYZ available to customer segment 2
Product prioritazation i.e. based on customer feedback, market intelligence and companies what features will see the light of day
Product requirements i.e. delivering epics, user stories and task with engineering
If there are lots of products, typically you want someone minding the entire purchasing POV.
That means pricing is typically owned by Product Marketing.
Product tends to own pricing very early in a company's maturity or when PMs are particularly business minded on new markets vs. building in an established category.
Both - pricing is a team effort.
PMM and PM should be in lock-step when building, executing, and optimizing a pricing strategy.
Some considerations on critical phases of pricing strategy development:
- Competitive differentiation: Both teams should proactively build a comprehensive understanding of the competitive landscape (e.g., how competitors price, what pricing/packaging models they offer, what makes their offering different or valuable, etc.) and form a joint POV on what makes the most sense for their product.
- Customer research: Equally as important is conducting interviews and fielding surveys that help frame how customers value a given product and what features are most important to them. Joint research among PMM and PM teams helps build pricing and product strategies that help explain the value your product delivers to your customer base and
- Feasibility assessment: As pricing and packaging plans are being developed, PM and PMM should have feasibility discussions with engineering and GTM teams into what features and capabilities are "must-ship" vs. "nice-to-haves" before launching a pricing model or change. Feasibility discussions range from how to gate certain features or experiences for paid customers to how to collect payment from new subscribers.
- Launch strategy: Messaging and launch communications will be critical to the success of any pricing model launch. PM and PMM should align on who will lead customer research and messaging development - typically, PMM takes the lead. Still, the PM team needs to be brought into the process as messaging will need to be consistent across product experience.
- Adoption tactics: Product adoption is a core goal for PM and PMM teams, so both teams should set up feedback cycles and track adoption/usage product metrics together to assess the effectiveness of a pricing launch. Joint reviews of feedback and metrics can help identify and connect solutions across a customer journey, which leads to better outcomes for the product team.
Pricing & Packaging is owned by Product Marketing at Drift. It's also been like that at my past companies (Enernoc, athenahealth and Toast). With that said, it's a highly collaboraive role - including partnership with sales, product, finance, operations and customer success. And of course, your executive leadership team.
Product Marketing owns the function - we are the driver of the pricing & packaging process, hold the pricing committees accountable, hold the meetings & follow-up, and partner with sales enablement to train the sales and cs teams on any pricing and packaging process.
Product management is responsible for communicating with their counterpart in product marketing about any upcoming product and/or feature releases that requires pricing or packaging work. We then bring this into our pricing & packaging process -- where our core committee discusses, evaluates and ultimately makes a final recommendation to our executive DRI.
You'll see different scenarios in different companies based on industry, size, skills, or company history. At PayFit, Product Marketing owns the topic, but we work very closely with product and biz ops. Product Marketing owns the project, but it's typically a cross-functional decision in the end. Finance, Product, Biz Ops, and Sales generally are substantial stakeholders in the process.
Product marketing will review current sales performance, customer repartition by pricing plans, discount, etc. You'll then review the data and challenge it with cross-functional partners before recommending a change.
If it's a new product you're launching, Product Marketing is typically involved (1) opportunity sizing, (2) validating customer pain, (3) and recommending the MVP. Product is also there hand-in-hand interviewing potential clients, building the MVP, and monitoring business impact based on the new launch.