Conflicts of interests about product pricing between stakeholders
Hello Scrum community!,
I got a question that I am sure you guys can help me with: imagine, when there is a conflict of interests between two stakeholders about product pricing (e.g. one wants reduce price, the other wants to keep the actual price otherwise the profitability will be reduced...); where the PO should search for information to deal with this issue?
The PO should search for metrics "inside" the corporation (e.g. channel sales strategy, customer satisfaction..., "outside" the corporation (e.g. competitor pricing) or mix of both?.
Thank you in advance.
PO's responsibility is maximizing value for the product increment delivered. Why should the PO dragged into this pricing debate? Or why does the PO need to search for information?
Thanks for your answer, please, let me give better information maybe: PO is responsible to maximize the Product's value but as I understood (s)he is also responsible of pricing strategy (which is part of the value delivered as well). So, if (s)he is accountable to make the decision of keep the actual product's price or drop/increase it, I assume that the PO must base his/her decision in facts. My question is... where should (s)he search, measure, get information... to have facts in order to make a decision?; should (s)he track customer satisfaction, market share, unmet customer needs...?.
I hope I clarified a bit the question; thanks in advance.
My question is... where should (s)he search, measure, get information... to have facts in order to make a decision?; should (s)he track customer satisfaction, market share, unmet customer needs...?.
Potentially all of these and more, depending upon the product and its environment.
- Which of these would be actionable within a Sprint time-scale, and help empirical process control to be improved?
- Which would lag, providing information that is less timely?
- Which could be vanity measures that look good, but cannot be usefully applied?
Thank you for your answer, I thought so also but I am trying to find more detailed info and I am not able to. To gather more info or background to be able to make a decision, what of the following do you consider the top or most important to consider in case that you cannot look at all of them because time is a constrain and I assume that PO cannot invest big part of his/her time in analyzing data: company profit, unmet customer needs, market share, price of the competition, satisfaction of the current users and/or sales?.
Miguel - Have you read the EBM Guide? Your answer might be unlocked by reading that material and thinking it through. Take a look and think about current and future value indicators:
but as I understood (s)he is also responsible of pricing strategy (which is part of the value delivered as well).
Scrum has nothing to say about that aspect. Scrum says that the Product Owner is responsibiel for maximizing the value that the Development Team delivers but how that is done is left up the Product Owner to determine based on practices from that field of expertise. What you are asking is for is advice on product marketing, product management and marketplace analysis. This forum isn't the greatest place for you to post that question. @Ian Mitchell and @Chris Belknap have given you the best answers you will get from a Scrum perspective. But what you really want would best be found on industry sites that are focused entirely on the business side of product management. Wish I could suggest one but I don't know of any as that ins't my field of expertise.
Ian, Chris, and Daniel have all provided valuable feedback that you should consider. You might also want to take into account at what stage you have uncertainty in the pricing. Whether it is in the initial stages of development of a new set of features, somewhere in the middle or whether it emerged at the tail end where new strategic direction needs to be thought of (before new relevant PBIs to that strategic directions are added). Regardless, as Ian pointed out it will be entirely dependent on the product and environment. You might want to connect with Ravi Verma who I believe is working with this and ROI.
Were I the PO in this scenario, I would ask the stakeholder suggesting a price reduction to provide reasons behind that suggestion. Say I own a burger place and I charge $8 a cheeseburger. My profitability is strong, plenty of regular customers, I'm able to maintain and even grow a bit. I start getting one of my regular customers suggesting to reduce the burger to $7, well the evidence proves that $8 is a good price point. My price is on par with my competition, not the most expensive and not the cheapest. Why would I entertain the thought of a price reduction without some valid reasoning? Now, if that customer were able to provide some actual metrics that would suggest I'm too expensive for the market and that I would be able to grow in customer numbers and profit; I would consider a pricing change. Otherwise, I would simply say "Thanks for the suggestion, here is why I charge $8 for this burger..."
Just because a stakeholder makes a suggestion, doesn't mean it's a suggestion that HAS to be implemented. The PO should validate what the market says and adjust accordingly. If 90% of customers don't have an issue with the pricing, why should the PO consider that? If 90% say the pricing is too expensive, the PO would be unwise to not consider a price reduction.