Question: Hi Mark, I am very interested in your field. I’m currently in charge of pricing and analysis. I’m facing a challenge in making my position more dynamic since the pricing from our perspective is a translation of a contractual agreement (supplier to a distributor in one group). How can I benefit from my current experience to build on it and switch to the market pricing world that I find more “exciting”… thank you in advance for your time and feedback.
Answer: Fabulous question. Most pricing analysts work to execute the pricing strategy devised by someone else. You may be creating and watching KPIs. You may be managing the international price book. These are important tasks, but they are tactics, not a strategy.
If you want to be more into pricing and at a higher level, here are some thoughts.
Three things…
First, do your current job amazingly well. Be enthusiastic, accurate and helpful when people ask questions or ask for new metrics. In short, be better than they expect.
Second, develop extreme curiosity. Why do you do things this way? Don’t be annoying to your boss, but be very curious. Think of other ways to get at the same information. Ask people who use your metrics on how they use them. What would make them better? Always be curious.
Third, think from the mind of the buyer. Try to understand the anomalies. When you win a deal at higher than expected price, what happened? Although sales might try to take credit, it was more likely a buyer who valued your product more. Seek to understand that. First, you put together models in your mind for how buyers make decisions, then you build models to estimate them. The more accurately you can model buyer decision making, the more successful your company and you will become. These models are what inform effective decisions inside the company.
Understanding Pricing
You should be able to do all three of these from your current role. As you progress on each of them, you will gain more respect in the organization. You are beginning to think strategically and to understand pricing better. After all, understanding pricing is really about understanding buyer decision making. Then strategic pricing is about using that knowledge to help other people in the company make better decisions.
Finally, as you gain more respect, it will still take time and intention to build influence inside your company. Be very careful here. Pricing people typically have no authority. Their effectiveness must come from influence and leadership. More on that in a future blog.
