I have not been able to find an answer to the question “what is the business value of a product manager?”
So, I did some arithmetic, and here’s what I came up with:
A product manager should be worth between $5 and $10M of annual product revenue Click To Tweet.
A product manager is worth between $5 and $10 million of annual product revenue.
That’s an educated guess, a stake in the ground, a challenge to you.
I arrived at that value working bottom up using familiar financial ratios from software product companies:
Combining those ratios results in one product manager for every $5-10 million in revenue.
I’ve taken a leap and assigned this as the business value of the PM – if you hire a product manager, then you are looking toward increasing your revenue by $5-$10 million annually. ([tweetthis]If you hire a #prodmgr, then you are hoping to increase your revenue by $5-$10 million annually[/tweetthis])
Once you put a stake in the ground about the business value of a product manager, you can ask interesting questions.
If you are a product manager, you can ask:
If you manage product managers, you might ask:
And here are two questions for you:
I’m curious to see how this conversation ends up. I believe that putting software product management on a concrete business value foundation could be transformative for the profession.
What is your take on the business value of a product manager? Does this concept make sense to you? Do you think my figure is correct? Way off? Unmeasurable? Let me know.
Your host and author, Nils Davis, is a long-time product manager, consultant, trainer, and coach. He is the author of The Secret Product Manager Handbook, many blog posts, a series of video trainings on product management, and the occasional grilled pizza.
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