Product Management has lately been in the lime light and Product Managers have become the new blue-eyed boys of the organisations. However, most product management roles still seem restricted to features and specifications rather than comprising of the wider gamut of aspects ensuring product success. And I believe this leads to under-utilised resources, especially when product managers are MBAs / B school grads, itching to use the frameworks and finance math learned in the classroom.
Getting the product pricing segments right is perhaps more critical than crafting the perfect set of feature backlog for upcoming versions. However, in most tech / IT companies, this domain is ruled or headed by functional or technical experts, leaving these management facets under emphasised and often left to marketing or sales. And this makes sense in certain cases when pricing requires customer connect and knowledge of management frameworks, both of which may be unavailable with the technocrats in product team. Similarly, sales and marketing teams may lack deep product knowledge and subsequently fail to gauge the value of pain resolutions and utility gains.
At executive level, when product managers are engaged in managing versions and incremental releases of IT solutions, this disconnect may be acceptable. However, at higher levels of product managers and product owners, one must be cognisant of the wider facet of items responsible for driving product success. This is more apparent outside of IT; for instance, in real estate product development – product managers often reverse integrate the product development based on the acceptable price parity in market segment or in engineering when prices are derived as cost plus profits or based on total economic value based on tangible benefits.
Hence, product managers and owners must not only be well versed with engineering technicalities and domain functional but also understand the concepts of management. As pricing is a function of costing as well as other management and marketing principles. For instance, product managers in real estate must be familiar with construction and built space along with facilities and operations management – for creating a great product. But in order to set the price right or develop a product within market parity price – they must understand pricing principles as well as costing methods.
And even without diving deeper, even to merely decide whether the price point will be anchored to cost or be independent of cost, one must understand microeconomic principles along with market forces. For instance, pricing in competitive markets such as audit is driven by market parity and the cost must be controlled by creating a service delivery or product within stipulated prices; whereas in monopoly or value driven market such as advisory, the price charged would be a function of the total economic value.
Although expressed simply, such judgements emanates from deep cognition resulting from the coalescence of following three: Product Technicalities, Application Domain or Functions, and Management Principles. Under usual circumstances, most product leads and managers easily cultivate the first two as a part of their jobs. However, the later requires formal training, if not an MBA or B-school degree.
If you agree with my thoughts and are want to build your competitive advantage, you can learn more on this topic, click here to visit our highest rated guide on Product Costing and Pricing Strategy exclusively available on Udemy.
Savvy Munshi 