What is the current status and decision-making strength of Pricing?
Have you noticed that pricing leaders are massively outnumbered by their sales and marketing peers?🤷♂️
The numbers speak for themselves:
➡️Sales and Marketing have 76x and 77x more decision-makers than pricing😮
➡️Pricing has just 13,000 decision-makers globally, spread across tenths of millions of companies on LinkedIn😳
And it gets worse...
➡️ Sales teams outnumber pricing teams by 182x, with 20 million employees
➡️ Marketing teams? 46x more employees than pricing, with 5 million employees
➡️ Pricing professionals? Only 110,000 globally!
Pricing isn’t even included as a department in LinkedIn filters, unlike Sales and Marketing. It’s like Pricing is "invisible".
Is this "normal"? Or are companies underestimating the power of pricing? 🤔
Many businesses focus heavily on sales and marketing, but without a structured approach to pricing, they could be missing a lot. Pricing can:
➡️Boost profits more than anything else
➡️Drive revenue growth and market shares
➡️Offer a competitive edge and be part of the company's story
Let's now dive deeper into how the pricing function evolves from smaller to larger companies.📈
There’s a striking, near-perfect linear relationship between company size and the number of pricing professionals:
For every 2,000 employees*, companies tend to add just 1 pricing professional. This is a strong benchmark for whether your company is over or under-investing in pricing.
Obviously, this varies per industry.
For instance, Software companies underperform with 1 pricing professional per 5000 employees.🤔
On the other hand, the Automotive & Manufacturing Industries perform better than the average with 1 pricing professional per 1000 employees.🙂
All the above raise a critical question: What happens to smaller companies?😳
➡️For companies with less than 2,000 employees, most don’t even have a dedicated pricing person, let alone a full pricing department. Imagine the missed opportunities!
➡️Larger companies typically have a more structured pricing function. For instance, a company of 20,000 employees typically has a pricing team of 10, including 1 decision-maker (e.g., director), 3 middle-level managers, and 6 pricing professionals (e.g., analysts).
Of course, these may vary per industry or other factors. But it still makes us wonder: What does this tell us?
Pricing is still emerging, starting with larger companies and slowly moving into smaller ones. It is mature enough to have a predictable size and structure with specific benchmarks indicating today's norm.📏
But is this norm sizable enough to make a real impact on profits and growth?🤔🚨
*This benchmark is based on LinkedIn Sales Navigator information. Based on Danilo Zatta's book "The 10 Rules of Highly Effective Pricing", in terms of revenue, the corresponding benchmark is 1 Pricing person for every $100M in revenue, again confirming that Pricing is limited to larger companies.
Interested in learning more about AI-Powered Price Optimization and Strategic Forecasting?
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