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The Role of Pricing in Defining Product Requirements | PROS

The Pragmatic Marketing theme for this month is “Requirements.” As their pricing blogger, I wanted to write on how pricing should help when defining product requirements. Here are my thoughts. What are yours?

Let’s start by defining “requirements” as what the product team gives the development organization to work on. These are the next features or products the company will develop. So when does pricing care about what development does? I’d say the answer is two-fold.

First, we’d rather develop the attributes that have the most value in the market. Given a choice between two attributes, we’d prefer to develop the one that has the biggest return. That may be measured in number of new customers or the extra amount someone is willing to pay or a combination of these. Our knowledge of pricing should be able to help with these decisions. Possibly the most powerful tool to help with understanding the value of an individual attribute is conjoint analysis.

Second, we care a lot about the product portfolio. As product people knowledgeable about pricing, we want good, better, best portfolios. Development won’t create them unless we write the requirements.

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The Role of Pricing in Defining Product Requirements.