#18 The 4 stages of pricing

Pricing doesn't belong in Marketing alone anymore.

... in the way it used to, that is.

Let me explain.

In the world of FMCG (fast-moving consumer goods), this is fairly straightforward: Marketing & Brand Management typically manage pricing.

Which includes deciding the price point for each product.

But if you're building tech products, this is different.

Regardless of roles, there are 4 things we need to get right when it comes to pricing:

✅ Discover our pricing model and price point (e.g. customer's willingness to pay, business modeling)

✅ Set the price

✅ Operationalize it (e.g. overage handling, billing and payments platform)

✅ Communicate the price (e.g. storytelling in pricing pages, positioning)

Now, when it comes to roles, here's an important concept to understand:

💡 When we design a value proposition to address a certain customer segment, the price is part of that value proposition.

We want to design a product that customers want (desirability), are willing to pay for, and that is part of a sustainably profitable business model (viability).

Sometimes, we discover that customers are not willing to pay for a certain solution that we've conceptualized.

So we need to go back to the drawing board and iterate the value proposition.

👉 Simply put: desirability and viability are intertwined.

This is why cross-functional collaboration is so crucial in product development - with Product, Design and Tech side by side.

And it's also why Product Management should take the lead on Pricing - not Marketing, as it does traditionally in the FMCG industry.

Another reason for this is that operationalizing pricing in tech is highly entangled with the product experience itself - which will affect how users are onboarded, interact with it, how they'll pay for it, when, and so on.

The bottom line is:

Product teams (in particular, Product Managers) should manage Pricing - with Product Marketing being highly involved in supporting the discovery of the monetization model and managing the monetization experience, taking the lead on its communication.

The ideal is when product management and product marketing truly collaborate.

That's how we get the best customer segmentations, understanding of the market, positionings, and - ultimately - monetization models and experiences.

But Pricing doesn't belong in Marketing alone anymore, as it used to.

What's your take on this?

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Note 1: Ideally, Product Marketing is part of the Product Team. Not a "support function" disconnected from it.

Note 2: You could argue that "Product Marketing" is a part of "Product Management". That's also why orgs like Apple and AirBnB have merged the two roles into one.

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Hey there 👋 I’m Afonso, Founder & Partner at Scandinavian Product Group. Thanks for reading!