100 Thoughts on Pricing: #53
If you want your teams in ops, sales, and finance to act and feel more like owners of the business, one way to do this is grant them more autonomy in pricing decisions. Before doing so, however, it's incredibly important to make sure they have accurate and proper tools for making these decisions.
If your business targets a 40% P&L gross margin this year, but your pricing tool implies most new deals are at 55% gross margin because your cost rates are missing overheads, bonuses, and other direct costs, your sales team will feel perfectly justified in pushing a 20% discount because the deal margin will appear to still be better than what the business currently achieves. Things then devolve into fruitless circular arguments over who is telling the truth, who actually has the best interests of the business at heart, turning the teams you wanted to be owners into confused, dispirited silos instead.