Pricing: it is everyone’s responsibility

Pricing: it is everyone’s responsibility

Who has responsibility for pricing in your organisation?

Many readers will probably answer the marketing department. After all, pricing is one of the four p’s of marketing (product, place, promotion, price), albeit the forgotten ‘p’.

In leading companies, there will often be dedicated pricing resources in the marketing team, and in other organisations, product managers will probably devote about 10% of their time to this business-critical function.

In many other companies, particularly those that practice cost-plus pricing, the people who are responsible for pricing are typically found in the finance area. It makes sense – that’s where the cost data, on which they base their pricing decisions, resides.

Believe it or not, some companies will see pricing as a ‘sales’ function. This oxymoron has given rise to the view that, particularly when sales are heavily dependent on discounts to close a deal, sales is the ‘un-pricing department’, while pricing is the ‘sales prevention department’.

The fact is that pricing is everyone responsibility! Here’s why.

In the past month, I have had to call the same insurance company on two separate occasions. The first was to correct my address – due to a system upgrade my policy renewal notice was sent to the wrong address, and by the time the letter was correctly readdressed the policy had expired.

In the process of updating my records, and taking out a new insurance policy, the very courteous call centre staffer gave me a discount (50%, around $300) on the policy in relation to the one that had just expired. Thank you very much!

The second time I called them, a couple of weeks later, was to get a different policy changed from joint names to a single name (I have no idea how or why this change occurred: probably that system upgrade again). Once again, a different call centre staffer offered me a discount (21%, or $80) on my policy renewal.

On neither of these two calls did I enquire about the price of the policy, or ask for a discount. I was given the discounts without even asking! Small discounts to compensate for the inconvenience experienced may have been warranted, but certainly not of the magnitude of the discounts given. Money has been left on the table.

Let’s answer the opening question in a bit more detail: price setting could be anyone’s responsibility: marketing, finance or sales. But getting those prices is the responsibility of everyone in the organisation.

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