Game Changer

CHAPTER 5What the Hex? The Political Angles of Pricing Decisions

The definition of pricing strategy – a leader's conscious decisions on how to shape their market by determining the amount of money available, how that money flows, and to whom – makes pricing inherently political. The person or people who can direct those flows of money within a firm and a market wield enviable power.

That power creates either a struggle or a vacuum within nearly every company, regardless of sector or size: How does the firm keep sales, marketing, finance, and other functional teams aligned around a common strategic objective? Put more precisely: What governance model will ensure that these teams work in harmony to manage and, ideally, maximize the value the company creates and shares?

Figure 5.1 shows how each executive or functional area within an organization has a natural fit to one of the seven pricing games. The positions in Figure 5.1 indicate which functions should have the leadership role, because their main responsibility is to manage the most critical tradeoffs in that game. But there is also broad consensus that pricing is a team sport. Pricing decisions require cross‐functional input and insights, which means that other functions always have important roles and obligations. They provide necessary insights and information and serve as checks and balances on the function with the ...