“The essence of strategy is to align your ends with your means: to match your goals and your resources.” - Walter Russell;

As we approach the mid-point of 2025, it is the perfect time to begin to reflect on our goals and how they relate with price strategy to achieve greater sales velocity.

Pricing strategy is a crucial aspect of any business, as it directly impacts the profitability and success of a company. However, aligning price strategy between different functional groups can be a challenging task. Each department has its own priorities and objectives, making it difficult to reach a consensus on pricing decisions. To effectively align price strategy, it is essential to involve all relevant functional groups to develop a cohesive pricing strategy. 

In this article, we'll explore the importance of a mid-year alignment discussion between different functional groups to drive a successful price strategy toward achieving higher sales velocity.

Product management team

Product managers have a goal to ensure the success and profitability of their products in the market. This involves understanding the target market, identifying customer needs and preferences, and developing a product that meets these needs while also differentiating it from competitors. They must carefully consider the price setting strategy for new products as it can greatly impact perceived value and competitiveness in the market.

The product management function has a deep understanding of the market, including the target audience, competitors, and industry trends. They can provide market intelligence with insights into opportunities to gain market share or increase profits.  Insights to product rationalization will also help to align organizational efforts with core competencies.

Commercial team

The commercial team’s effectiveness is directly related to sales velocity - the speed at which a company can convert leads to paying customers. This metric considers the number of deals closed, the average deal size, and the length of the sales cycle.

Understanding the goals of the commercial team will provide insights into the commercial leadership’s strategy to gain market share using price as a lever to drive volume. These efforts should be balanced by identifying areas of growth that will produce higher margins and profitability.

Alignment on commercial objectives supported by market insights will provide opportunities for price support in strategic areas and clarity into areas for net price realization to close deals more effectively.   

Operational team

The operational team’s expertise in operations and production processes is vital in understanding the cost implications of different pricing strategies towards optimizing profit margins. It can help identify areas for cost reduction and improved operational efficiency.

Insights into excess inventory could be used to support a promotion. If operations are at capacity because of high demand, it may be a good time to increase prices, and/or invest in more resources to handle future growth based on insights from the commercial team.

By combining operational insights with market data, businesses can develop a more comprehensive and data-driven approach to pricing, ultimately leading to increased revenue and profitability. 

Finance team

The finance team plays a critical role in the alignment discussions as it is responsible for managing the financial health of the company.  They are responsible for setting the financial goals, for conducting financial analysis, including costing and profitability, and forecasting.  The finance team provides insights into financial resource deployment to achieve each functional goal. 

The alignment discussions enable the finance team to consider individual functional goals towards building a comprehensive plan.  The finance team makes the decisions on what is acceptable and what is unacceptable as a financial risk against the financial forecast and holds the teams accountable once a plan is set.  

The price function

In most cases, the price function would report to the sales or marketing department, as they are responsible for driving revenue and understanding customer needs and preferences. In a technology company, the price function may report to the product development team, as they have a strong understanding of the value and features of the product. However, the price function can also be found under other groups depending on the company.

The price function can provide insights into net price realization opportunities based on analytics that can include win rate, price elasticity, discounting, price and volume tradeoffs, . . .

Regardless of which functional group the price function falls under, it is essential for all departments to work together and collaborate with the price strategy. This cross-functional approach ensures that the strategies align with the company's overall goals and objectives. Ultimately, the price function should be viewed as a critical component of a company's success and should have a prominent role within the organization.