The role of pricing in an organization: There is no ONE pricing organization

October 04, 2017

There is no one pricing organization

Should pricing responsibilities be assigned to the company headquarters or local subsidiaries? Towards the top of the organizational structure or closer to the market? Unfortunately, there is no one-size-fits-all pricing organization – there are guidelines though.

The more important pricing is to a company, the further up it should be within the company’s structure. More and more companies are creating small, globally active pricing teams, however, the decision content and authority level of pricing teams greatly depend on a company’s culture and its business areas. In a decentralized corporation with diverse business areas such as 3M, the central pricing team may develop principles, processes and guidelines, but the resulting concrete price decisions are left to the regional organizations or business areas.

In a centralized corporation such as Apple, however, it does make sense to make international price decisions out of the headquarters in Cupertino.

Advice of Simon-Kucher experts:

Set up a global pricing team ensuring the right balance between market proximity and central function. Give your pricing organization enough power – a toothless tiger is useless.