Thursday, July 9, 2009

The voodoo that you do to price software

Voodoo Soup album coverImage via Wikipedia

Of all the marketing P's, pricing evokes the most emotion across an enterprise. My perspective is in software pricing, a voodoo like process that somehow results in a "price." However, this is not before emotional feedback from all impacted - and that is just about everyone in an organization.

Marketing: Pricing should reside in marketing as part of the marketing mix. Mostly it does, but not without a lot of "marketing" volunteers.
Sales: In their opinion, since they actually develop proposals and talk to users about pricing, they own it and have the most knowledge of it. Marketing? Who needs marketing. Sales will tell us what the price should be, marketing just needs to develop a nice little slick.
Product Development: They want to make sure their "baby" is priced appropriately given all of the hard work and features and functions that are included (even if they are not needed. Hello, Microsoft.)
Accounting/Finance: They are privy to all the costs so they know what we need to generate in revenue to cover the costs and produce an acceptable margin.
CEO: Ultimately it is his/her head on the line if numbers are not met.
Your mother: OK, kidding, but just barely.

So be careful, once the subject of pricing is actually broached, be prepared for a lot of bitter feelings, hurt looks, and fighting over who is right.

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