Is there a difference between Pricing, Packaging and Monetization teams?

“Pricing & Packaging” and “Monetization” seem to be used interchangeably without much clarification of what those mean. Such vagueness affects clarity of roles and responsibilities for those teams, impacting them negatively.

The relationship between those terms and functions is relatively simple, one builts atop and expands the scope of the other. With the most broad of them being: Monetization.

- Monetization strives to answer the questions: “What functionality should be built in order to maximize financial impact?” and

“For the functionality already built, what is the path of monetizing it? (churn reduction? driving a higher conversion rate? charging subscription fee? stimulating upgrade to more premium versions of the product?).”

Once those questions are answered, the work on Pricing & Packaging can commence.

- Pricing & Packaging: represents the second stage in Monetization strategy execution. Selection of appropriate pricing models (i.e. Good/Better/Best or Core + Add-Ons) as well as assembling features and functionality to match different audiences and customer types.

- Finally, Pricing / Rate-setting being the most tactical, and execution-focused step, answers the question: “What price points and discounting structure should be used?”. This step also includes any operational considerations for modification of rate cards and rate structures.

There is a tendency to focus on the last step of the process in the attempt to improve a company’s financial results. That focus is misguided. It doesn’t take into consideration that Monetization is a broader term than rate card design. In some cases, positive financial impact can be realized without changes to existing price points. An effective Monetization strategy may or may not include Pricing / Rate-setting.

Therefore, “Monetization” is the most appropriate term to use for describing any function that works on Pricing & Packaging. It emphasizes the fact that such a team should maintain a broad focus to maximize its impact.