Today’s article is an answer to a question I received:
Just to introduce myself: I started my career in a cost consultancy startup that was involved in implementing activity-based costing. I later moved into my new role in pricing and realize that I come up short in this field; I am constantly seeking new knowledge and training. I am in the process of registering a side consultancy to help small to medium companies in my country understand their “cost to serve” and to advise on their pricing. How would you advise a young professional like me to gain skills and knowledge in this exciting field? I aspire to dominate in this field in my country many years from now!
Below is my reply – I hope you find it helpful.
Hi J, so far, you are on an excellent track. Here are three key things you have going for you: 1. You seem to be a quantitative person (who else would work well in cost accounting?). 2. You have set a goal – to become a pricing expert. 3. You are willing to work hard and study to achieve your goal. So few people set goals, and even fewer are willing to do the work it takes to achieve them. I’m confident you will be successful.
Here are four pieces of advice as you launch your new career.
First, forget everything you know about costs. Costs don’t drive pricing. Willingness to pay drives pricing. Hopefully you already know this, but because you come from a background in cost accounting, this may be difficult to accept. Read up on how costs matter, and then learn how to articulate this to other people. This single issue will be your biggest asset in your pricing career.
Second, continue reading and studying. Of course I like my book, Impact Pricing. There are many other books that are excellent in regards to pricing. Early in my career I probably read The Strategy and Tactics of Pricing five times (and I used it as a textbook in a pricing course). I also often interview pricing people on my podcast, Impact Pricing.
Third, get involved with some real pricing projects. Find case studies. I’ve done a few podcasts where we talk about how companies can improve their pricing. Sometimes in my blog I offer pricing advice to specific situations. You will eventually want to create a framework on how you think about pricing so you can use it with your consulting clients.
With regards to getting involved with some real pricing work, see if you can find some pricing data to play with. Experiment and see what you can learn from it. How would you recommend a company could use the data to improve? This is all a learning exercise for you.
Finally, maybe you can find a consulting company to take you on as an intern or employee. All consulting firms use different tools and frameworks, but learning one well will get you through the learning curve much faster.
I hope this helps – good luck in your journey.
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