State of Pricing

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.📈

• Companies with 10000+ employees have multiple pricing professionals!

• 5000 - 10000 employees? Only 2-3 specialists.

• 1000 - 5,000 employees? Most - but not all - have just 1.

• Less than 1000 employees? With a few exceptions, most companies have no pricing professionals.

There seems to be an obvious pattern here, so let's dive deeper and try to find it!

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.

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