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What a Pricing Governance Team Should Never Do

If you have siblings, if you are the parent of siblings, or even if you’ve just ever been around siblings who aren’t seeing eye-to-eye, there’s about a 100% chance that you have heard the following phrase (probably in a loud tone of voice):

You’re not the boss of me!

Brothers and sisters seem to have an almost inescapable need to tell each other what to do. And the brothers and sisters who are being told what to do seem to have an equally inescapable need to object to that treatment.

Unfortunately, that same situation arises all too often in the working world, especially when a firm has a pricing governance team.

Now, don’t get me wrong, we at PricingBrew actually think that pricing governance teams are pretty great — when they function properly.

The problem is that the very name “pricing governance” gives some people that the team is there to provide oversight for the pricing team. In other words, the pricing governance team thinks they are meant to be the boss of the pricing team.

That idea is 100% wrong. The governance team should never be telling the pricing team how the do their jobs.

Instead, the proper role of a pricing governance team is to bring together all the stakeholders who take part in the pricing process and get them to communicate and collaborate. In any organization, pricing requires efforts from lots of different teams. People from sales, marketing, product, pricing, finance, and maybe even manufacturing all contribute. The pricing governance structure acknowledges that reality and helps to get the entire organization on the same page.

It does help the pricing team do a better job, but not through micromanagement. It helps the pricing team do a better job by allowing them to get insights from other parts of the company and by deputizing people from other departments to help evangelize and enforce the pricing processes and policies that are in place.

Sometimes, however, the individual members of a pricing governance team can get a little off-track. They sometimes stray from their big-picture focus and instead start meddling in the day-to-day operations of the pricing team. This seems to be a particular problem when the company is facing a period of crisis and everyone is looking for a way to solve the problem – or for a scapegoat.

When this happens, pricing sometimes needs to gently remind the pricing governance team that “You are not the boss of me!” (preferably with different words and in a moderate tone of voice). Refreshing their memories about the purpose of the group can be helpful – especially if you have a written document that lays out the ground rules for the pricing governance team.

If you yourself need a refresher on what a pricing governance team is, what it should (and shouldn’t do), and how to establish one at your company, check out the PricingBrew express guide to Creating & Managing a Pricing Governance Team. You might also be interested in the webinar Building a Pricing Center of Excellence, which is a very similar structure with a slightly different name.

Collaborating with other stakeholders can be one of the most effective ways to improve pricing within your company. Just make sure that you establish solid guidelines that keep the focus on collaboration – not on micromanagement.

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