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How to prioritize items in the Product Backlog ?

If you are not the Product Owner, you could just say “Ask the Product Owner / It’s the responsibility of the Product Owner”, and you would technically be correct. But, hey, you are now working in the Scrum model, and part of the responsibilities that come with Scrum is that the team feels a higher sense of ownership for the feature, and it is important for you to understand or think through how the feature prioritization in Scrum can happen. Technically, the team is responsible for the feature estimation, while the definition of which feature comes in which Sprint is done by the Product Owner (or atleast, the decision about which feature will come earlier).
However, if you look at most established setups, a Product Owner is almost always a person from the Product Management side, and may be at the technically sound level as someone from the development team (this is an assumption that I have found to be true in a vast majority of cases). As a result, the Product Owner looks more for features that add value to customers, and less likely to look for work that needs to be done in terms of architecture or other such engineering needs.
Consider some examples, whereby you are working on a desktop product, and your version of Visual Studio is now old, and you really need to move on. However, moving onto a new version will take some technical effort and testing, and this effort does not come free. To get this in, with the same amount of total effort available, some feature work will need to go out, and be dropped; and these are features that help in selling the product. In most cases, the amount of resources available is known, and you cannot do a trade-off in terms of getting more resources. How do you sell this argument to the Product Owner / Management, especially given the dropping of some feature to support this need ? Further, even if Product Owner agrees, how do you get this to be a high enough priority that you do this early.
One way that I have seen this working is when the engineering management, the Scrum Master and the Product Owner sit together, and when preparing the initial Product Backlog, recommend the required technical changes needed in the product, along with the schedule / Sprint cycle in which these need to be done, and be sure that the Product Owner is agreed on these requirements. If the team has enough trust and bonding, then the Product Owner will know that you are doing the right things, and will get them included in the Product Backlog with the required priority.

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