What I’ve Learned From Three Years in Pricing
I recently passed my third year anniversary being a consultant with Wiglaf Pricing. Three years is a long time, we’re told, for a millennial to have the same job. And to be honest, it is the longest job I’ve had.
Working in pricing is also the first job I’ve had that I can envision being in for years to come. The field has a lot to offer, but it’s a field that few people know exist. And to be honest again, I didn’t know about it until I was just about to finish business school.
I thought I’d take this anniversary as a moment to reflect on what I particularly like about pricing. I hope it resonates with those of you already in the field, and perhaps encourages those outside of it looking for a new challenge.
Pricing is Impactful
Everyone knows the feeling of having a job without a clear impact. I’ve enjoyed every job I’ve had, but with some I’ve spent entire days unsure of the final value of what I was doing. Who was gaining knowledge from this report? What goal was this meeting solving? How was this project helping the company?
Conversely, working in pricing is impactful. It has a direct and measurable effect on the bottom line of a business unit or company. For many businesses, a 1% improvement in price can cause a 10-13% improvement in profits. That is a substantially larger profit effect than had by a comparable improvement in sales volume or costs.
A life sciences pricing manager I know has been helping his company find improvements in price for a couple years. And he knew the impact those changes had. One day he was in the elevator with his CEO, who asked him “So, what have you done for me recently?” The pricing manager smiled and responded “Well, I made you an extra half million dollars just this morning.”
If you want a career with impact, pricing is a great choice.
Pricing is Multidisciplinary
Traditionally, pricing is considered one of the Four Ps of Marketing, along with product, promotion, and place. But thinking about pricing as simply a subset of marketing is a mistake. Doing so leads to pricing strategy becoming an afterthought, when in fact it is foundational. Pricing also requires a different skill set from general marketing.
Pricing sits at the intersection of sales, marketing, finance, and product—among others.
- Sales: Professionals involved in pricing need to understand commercial priorities and the language of salespeople.
- Marketing: They must see how pricing strategy is supported by and complements different marketing initiatives.
- Finance: They must have the quantitative toolbox frequently seen in finance, and similarly always keep an eye on margin and the profit goals of the firm.
- Product: Finally, pricing professionals must work closely with product, as both the price and manner of sale of a product are two of the most customer-facing decisions a manager can make.
My previous work experience involved statistics, foreign policy studies, marketing & sales support, and IT systems analysis. I frequently felt that such a variety was a handicap when pursuing my next step in business compared to people who had been doing the same function since college. But pricing requires drawing knowledge, skills, and experience from every role I’ve had.
Pricing is very multidisciplinary. On the one hand, that means that working in pricing ensures you are never siloed. On the other hand, you must be prepared to wear many hats. For me, though, those are both pluses.
Pricing is Growing
It turns out that I wasn’t alone in my ignorance of pricing as a field. Many companies, even large corporations, don’t have an individual or teams assigned to pricing strategy. But more and more groups are learning how much money they are leaving on the table, or their hand is being forced by competitors who know the value of pricing.
Whether the pricing function is within another department or exists on its own, though, the need for pricing professionals with a diverse skill set, the ability to communicate quantitative findings, and the persuasion ability to get changes accomplished is only increasing.
Not only is the importance of pricing increasing, but even the body of knowledge is rapidly growing. Pricing strategy as a field is quite young. Many applications and techniques, such as revenue management, are only a few decades old. As I’m exploring in an upcoming book, The New Invisible Hand, the modern explosion of e-commerce and big data is leading to many new abilities and approaches—heretofore impossible to implement.
Many groups are helping to organize such information and prepare professionals for such careers. The Professional Pricing Society helps to train, educate, and bring people involved in pricing together. The Simon School at the University of Rochester offers a comprehensive pricing track in their MBA program (and gets their students hired). The Silicon Valley Pricing LinkedIn group tracks pricing job openings across the country. And we at the Wiglaf Journal provide focused analysis, and our tracking of trends.
In an atmosphere of uncertainty over the future of so many jobs, pricing strategy is only growing.
If any of this sounds appealing, I encourage you to learn more at any of the resources I’ve linked to, or simply drop me a line. The fun is just getting started.