What Skills and Training Do Pricing Professionals Need?
When it comes to defining the role of pricing, it can be complicated. Pricing can mean various things in various industries and companies. Similarly, the tasks that different pricing professionals require at different stages in their career vary considerably as well.
However, there are certain commonalities in the type of skills that pricing professionals use at different levels of maturity. To illustrate this, we have developed the following pricing talent matrix:
Let’s dig into this to see how this radial graph illustrates the abilities required of different pricing functions and team members.
Pricing Talent Matrix
The first three (analyst, manager, and leader) are internal roles within the company. The last two (external specialist and external expert) are external consultants typically brought in to assist with a specific problem or initiative.
At a high level, the separation of responsibilities is:
- Analyst: analysis, reporting, recommendations
- Manager: overseeing analysts, coordinating with other departments
- Leader: leading the pricing organization, setting strategy
- Specialist: specific quantitative methodology or tool
- Expert: strategy consulting, organizational design, change management
Radial diagrams allow us to show how these roles vary based on three categories: use of qualitative acumen, use of quantitative acumen, and use of emotional intelligence. The further each line goes in the direction of one of the three categories, the higher the use of that ability for that role.
Now let’s dive into what exactly we mean by each ability. Note that we’re talking about use of these skills, not who holds the greatest competency in each.
Use of Qualitative Acumen
Qualitative acumen is defined broadly as the understanding of the concepts and practices of pricing as a field. This also includes familiarity with related fields, such as sales, marketing, and finance, as good pricing acts as an interstitial and organizing function within the business organization.
It also includes understanding more general topics, such as business strategy, psychology, communication, and negotiation. Both to serve the pricing team and the organization as a whole, pricing professionals must be comfortable with getting their point of view across and seeing where they fit in the larger corporate picture.
Use of qualitative acumen increases as an executive moves internally from analyst, to manager, to leader. Each step up requires greater actionable understanding of the functions and concepts above. Managers and leaders especially must guide their team within the larger organization and coordinate with their peers in other functional areas.
The highest user, however, comes from outside of the organization: the external expert. When consultants, such as our team at Wiglaf Pricing, are brought in to answer questions of strategy and direction, they are tasked not only with understanding the situation and dynamics within the company but also with bringing to bear substantial experience with other organizations and industries. Such acumen is required to turn around shrinking margins, improve coordination across silos, launch profitable products, and align sales team incentives.
Courses from the Professional Pricing Society (PPS) are a great resource for anyone who wants to increase their qualitative acumen. They have been providing classes and workshops for many years, drawing in pricing professionals who need to understand how better to do their job.
The PPS’s Certified Pricing Professional (CPP) certification program is excellent for building and demonstrating qualitative acumen, with certain quantitative modules as well.
Use of Quantitative Acumen
Quantitative acumen is defined broadly as expertise with different methods of math-based analysis. The types of math deployed by a pricing professional include plenty of algebra and statistics, but also more advanced subjects such as econometrics and data science.
Much is done in Excel; other dedicated tools, whether CPQ software or visualization software platforms such as Tableau, are common as well.
These find their use in many ways, including analytical methodologies particular to pricing. Such tools include Gabor-Granger, Van Westendorp, Economic Value to Customer, conjoint analysis, and velocity pricing, to name only a few.
You may think that, internally, quantitative acumen is most pertinent for the analyst, but as the matrix reveals, it actually increases as you go from analyst to manager, and manager to leader. If you are leading a team and/or setting strategy, you must understand the analysis that undergirds your decision making. A manager or leader must have the acumen to direct their analysts and know what constitutes good analysis.
While the external expert uses a great deal of quantitative tools in their work, the heaviest user is the external specialist. Their role is entirely focused on bringing to bear specialized quantitative tools to an engagement.
Dedicated online resources for pricing professionals to improve their quantitative acumen are lacking, but we’re working to change that. In the meantime, executives increase their skills via graduate education, general courses in some of the fields mentioned above, and exposure to such methodologies in the course of their work or via an external consultant.
Use of Emotional Intelligence
Emotional intelligence is defined as the capacity to handle interpersonal relationships and one’s own emotional state with skill and understanding. Increasingly, it is a prerequisite skill in any profession, and pricing is no exception.
A knowledge worker cannot be effective if they are not emotionally resilient and dependable. As pricing is a team sport, pricing especially cannot function well without good interpersonal relationships within the function and across the sales, marketing, finance, and other departments with which it is constantly interacting.
The use of emotional intelligence unsurprisingly increases with increased management and leadership responsibilities. Former US president Dwight D. Eisenhower defined leadership as “the art of getting someone else to do something that you want done because [they want] to do it, not because your position of power can compel [them] to do it.”
Leadership, therefore, is persuasion. And to persuade someone, you must understand their internal state and manage your own.
Consequently, the highest users of emotional intelligence are the internal leader and the external expert. Both are responsible for developing strategy, motivating teams, and effecting change. Neither can be effective without a solid understanding of stakeholders’ (and their own) emotional states.
To improve emotional intelligence, focus both inwardly and outwardly. Inwardly, observe what triggers changes to your emotional state and try to anticipate them. Outwardly, ask for feedback and take the time to understand your coworkers, customers, and suppliers (not to mention friends and families as well).
Take a look at where you are in your career and ask yourself:
- Am I using the right skills for my job?
- Are there gaps in my understanding that are hurting my performance?
- Am I equipping myself with the right knowledge for my next role?
If the answers to those aren’t positive, make use of the resources in this article and take the next step in your pricing journey.