Is there a career in pricing? An insider’s view of the ...

[Pages:8]Is there a career in pricing? An insider's view of the pricing profession

As little as 10 or 15 years ago, most prices were set by salespeople, marketers, or product managers as part of their overall responsibilities. Today, however, more and more companies are treating pricing as a job in its own right. For good reason: A strong pricing capability, one that uses the multitude of new pricing technologies and tools developed over the past couple of decades, can be a powerful way to bolster a company's stock price and its bottom line.1 And the time and attention needed to get modern pricing right often means dedicating full-time resources to the job.

Figure 1. Base salary ranges by role

Executive level 9%

18%

27%

VP/director 7%

46%

Mid-management/ manager

13%

Analyst (individual contributor role)

Support/ coordination role

38% 49%

Other

25%

100% 50%

45%

32%

10% 5%

42%

6% 1%

38%

11% 2%

13% 13%

$50,000 to $75,000 $76,000 to $100,000 $101,000 to $150,000

$151,000 to $200,000 $201,000 to $250,000 $251,000 and above

Figure 2. Bonus eligibility ranges by role

Executive level 9% 18%

Support/ coordination role

Analyst (individual contributor role)

Mid-management/ manager

36%

12%

30%

VP/director 2% 6% 7% 17%

Other

50%

73%

100%

40%

19% 2% 2%

22%

19%

14% 2%

33%

36%

38%

13%

But despite the growing recognition of its value, pricing as a profession still suffers from something of an image problem. Many outside the field view pricing as a niche specialty without the status of longer-established functions such as finance or operations. Even some pricing specialists we've spoken with wonder if pricing can give them the same professional opportunities that they might find in other fields.

The question of whether there is a career in pricing ? and, if so, what rewards and challenges it holds ? should concern employers as well as individuals. Companies seeking to build a world-class pricing capability would do well to understand what attracts pricing professionals to the field, what they like and dislike about their jobs, and what employers could do to better find, keep, and motivate them.

To explore these issues, Deloitte surveyed 317 pricing professionals about their past experiences, current jobs, and future expectations. The results were revealing. Pricing, far from being a dead-end job, can not only be a satisfying career in itself but also provide a springboard to positions in other fields.

Money, status, and satisfaction Sixty-two percent of our respondents earned more than $100,000 a year in base salary; one-quarter earned more than $150,000 a year (Figure 1). Eighty-eight percent of our respondents also reported that they were eligible for an annual bonus. Among these, 43 percent reported that their bonuses could potentially amount to 20 percent or more of their base salary (Figure 2).

42%

0% bonus 16% to 20% bonus

1% to 10% bonus 21% to 30% bonus

11% to 15% bonus More than 30% bonus

1 "Clear and Present Value," Deloitte Development LLC, 2008

As used in this document, "Deloitte" means Deloitte & Touche LLP, Deloitte Tax LLP, Deloitte Consulting LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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Our results show that many pricing professionals have moderate to substantial organizational status and influence. Eighty-one percent of our respondents were in middle management or above; 42 percent were VPs, Directors, or C-executives (Figure 3). Admittedly, the pricing career ladder rarely reaches as high as the C-suite: Only 8 percent of our respondents reported that their company had a Chief Pricing Officer or equivalent.

The path to pricing Where do pricing professionals typically come from? Our results suggest that the vast majority come to pricing from other fields. Among our respondents, 22 percent reported that they had previously been in finance, while 19 percent reported that they had come to pricing from marketing (Figure 5). Many also reported pre-pricing job experience in operations, sales, and consulting. Only three percent reported that they had always been in pricing.

Figure 3. Distribution of pricing roles

Executive level 3%

VP/director

Mid-management/ manager

Analyst (individual contributor role)

15%

Support/ coordination role

0.3%

Other 3%

Figure 5. Function prior to coming into the pricing profession

39%

Finance

22%

Marketing

39%

Operations

19% 14%

Sales

10%

Consulting

8%

Engineering

3%

Business intelligence

3%

Technology

3%

Always been in pricing

3%

Other

17%

We also found that the pricing professionals in our survey enjoyed high job satisfaction. The vast majority of respondents ? 83 percent ? reported that they were "very satisfied" or "satisfied" with their current jobs (Figure 4).

Figure 4. To what extent are you satisfied with your current job?

Very satisfied

28%

With respect to their formal education, most of our respondents reported having taken the business track. Forty-three percent held MBAs, while an additional 26 percent held a BA or BS in business (Figure 6). A business education, however, was by no means universal: other respondents reported educational backgrounds in areas as far-flung as mathematics, hospitality, education, and auto mechanics.

Satisfied

Neutral

11%

Dissatisfied

6%

Very dissatisfied 1%

55%

Figure 6. Respondent educational background

BA/BS - Business

BA/BS - Liberal Arts 4%

BA/BS - Science 4%

BA/BS - Engineering 3%

BA/BS - Computer Science 0.3%

Other BA/BS 2%

MA/MS

6%

MBA

Ph.D./DBA 3%

Other

9%

26% 43%

Is there a career in pricing? An insider's view of the pricing profession 3

When asked what they themselves thought was the "best" background to bring to pricing, 25 percent of respondents chose finance, with marketing a close second at 22 percent. Notably, of the 15 percent of respondents who chose "other" as the best background for pricing, most of these thought the best preparation for pricing was "a combination of backgrounds," usually including finance and marketing.

The long-term prospects Our survey suggests that the pricing profession holds career advancement opportunities similar to those available in other fields. The strong representation of high-level roles among our respondents indicates that the pricing profession has room for business leaders as well as for middle managers and individual contributors. Additionally, many of our respondents (34 percent) had been in pricing for 10 years or more (Figure 7), and half of our respondents intended to stay in the field for at least six more years (Figure 8). This indicates that pricing can have enough of an attraction to keep people in it for a respectable length of time.

Figure 7. How long have you been in pricing?

Respondents also had a very positive view of pricing's role in their careers. Eighty-five percent agreed or strongly agreed that their current pricing role was a "very strong" career enhancer (Figure 9). This positive view held true even among respondents who planned to leave pricing after five years or less, 80 percent of whom agreed or strongly agreed that their pricing role was a very strong career enhancer. Taken together, our results suggest that pricing can not only offer a path to advancement within the field itself, but that it can be a valuable springboard to roles in other business areas.

Figure 9. Indicate your level of agreement with the statement: "I consider my pricing role to be a very strong career enhancer."

Strongly agree Agree

Neutral

11%

Disagree 3%

Strongly disagree 1%

39% 46%

0 to 3 years 4 to 6 years 7 to 9 years 10 years or more

17% 16%

33% 34%

Figure 8. How much longer do you intend to stay in the pricing field?

Figure 10. Where do you plan to go next with your career?

Stay in pricing

40%

Marketing

15%

Consulting

7%

Finance

7%

Operations

6%

Business

5%

Sales 3%

Technology 1%

Other

14%

5 years or less

50%

6 to 10 years

27%

11 to 15 years

9%

16 to 20 years

13%

21 to 25 years 1%

26+ years 1%

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Sixty percent of respondents reported that they planned to enter a field other than pricing as their next career move (Figure 10). Marketing, consulting, and finance were the most popular destinations. Among the 40 respondents who chose "other" as their preferred field after pricing, four planned to pursue executive management roles ? evidence that at least some pricing professionals believe that pricing can offer a path into the C-suite, as a CPO or otherwise.

The work environment Our respondents' views of their work environment provide a glimpse into the day-to-day experience of working in the pricing field.

Our results indicate that many companies still see pricing as part of a larger corporate function ? but that there is no widespread agreement on which function. Many of our respondents' pricing organizations reported to marketing, but a good many others reported to finance or sales, and still others to areas as disparate as corporate strategy, risk management, and IT ? as well as directly to business management or a C-level executive (Figure 11). This may be one reason so many of our respondents viewed their pricing jobs as an entry to nonpricing roles: for most, a move to a role outside pricing could take place without their having to leave the broader function, which would be a bigger organizational leap.

Figure 11. The pricing function in my organization reports to:

Marketing

33%

Finance

17%

With respect to decision-making power, our results indicate that only a minority of companies give the pricing organization final say in pricing decisions (Figure 12). Many respondents reported that final pricing decisions were made collaboratively among functions, while others reported that decision-making authority varied with the particular division, product line, location, or transaction size. On the other hand, 81 percent of respondents reported that they personally were always or often part of the decision-making process for pricing (Figure 13).

Figure 12. All final decisions on pricing in my organization reside with:

Pricing Sales

Marketing Finance Other

16% 14% 7%

30% 34%

Figure 13. I am part of the decision-making process for pricing:

Always

Often

Sometimes

15%

Rarely 3%

Never 1%

42% 39%

Sales

10%

Other

Finally, when we asked respondents to identify the single

most challenging aspect of their jobs, "Data availability/

39%

reliability" topped the list, with 33 percent of respondents

selecting it as their biggest challenge (Figure 14). This

result is consistent with our long-standing impression,

based on our field experience, that data collection,

management, and integrity issues are often one of the

most significant bottlenecks to pricing improvement.

Is there a career in pricing? An insider's view of the pricing profession 5

Figure 14. What is the most challenging aspect of your job?

Data availabilty/ reliability

Lack of resources

33% 21%

Lack of executive support

Change management

Lack of pricing knowledge

Other

17% 16% 4% 10%

Finally, establishing formal career paths around pricing can go a long way toward making pricing more visible, and hence more attractive, within the company. In keeping with pricing's value as a stepping-stone to other fields, these paths should include both those that pass through pricing and those that negotiate their way upward within the profession. We find that many pricing professionals today need to forge their own career path without the benefit of structured organizational support; companies that implement such supports may gain a valuable advantage in the search for pricing talent.

Boosting pricing's attractions Our findings point to several strategies companies may wish to explore to effectively find, keep, and motivate its pricing professionals. First, the diversity of backgrounds among our respondents suggests that companies can find potential pricing talent in many more places than they might think. Prior pricing job experience is not essential to being effective in a pricing role ? provided that the company can train "imports" from other fields on any pricing-specific skills they may need, either through formal training programs or through on-the-job experience. Tactics might include recruiting pricing candidates from a variety of organizational functions and considering a wide range of educational and professional backgrounds for pricing positions.

We believe that our survey results are highly encouraging for the pricing profession. Current and aspiring pricing professionals can take heart that our survey supports the position that there is, indeed, a career in pricing for those who want it ? and that it can provide valuable career benefits even to those who don't. Companies that can capitalize on the pricing attractions indicated by our survey and recruit talented people to the field should be well placed to reap the benefits that a skilled pricing organization can deliver.

Additionally, because many pricing professionals appear to value pricing as a career enhancer ? whether or not they plan to stay in the field ? companies seeking to attract candidates to pricing jobs may want to promote the idea that pricing can prepare an individual for careers in a variety of other areas as well as offer a satisfying career in itself. Besides encouraging a steady influx of talent to pricing, this angle can be useful in thinning out the ranks of professionals angling for top-level positions within the pricing organization proper, lowering the risk of morale issues due to perceived bottlenecks to advancement. One effective approach for many companies may be to have people rotate in and out of certain pricing jobs in order for them to gain experience viewed as valuable in their anticipated future roles.

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Appendix: Demographics

Figure 15. Respondent location

Figure 17. Respondent company revenue

U.S. - Northeast

19%

Less than $1B

U.S. - Southeast

18%

$1B to less than $5B

U.S. - Midwest U.S. - Southwest

U.S. - West Non-U.S.

13% 15%

6%

30% $5B to less than $10B $10B to less than $20B $20B or more

12% 11%

25% 30%

21%

Figure 16. Respondent industry

Technology

Process and Industrial Products

11.0%

Retail

8.5%

Consumer Products

7.6%

Transportation/Logistics

6.9%

Tourism/Hospitality/Leisure

5.0%

Telecommunications

3.8%

Automotive

3.8%

Aerospace and Defense

2.8%

Banking and Securities

2.8%

Life Sciences

2.5%

Media and Entertainment

1.6%

Oil and Gas

1.6%

Health Sciences

1.6%

Real Estate 0.9%

Government 0.9%

Power and Utilities 0.6%

Insurance 0.6%

Consulting 0.6%

Other

15.5%

21.1%

Is there a career in pricing? An insider's view of the pricing profession 7

Contacts Larry Montan Director, Deloitte Consulting LLP +1 612 397 4784 lmontan@ Mike Simonetto Principal, Deloitte Consulting LLP +1 404 631 2348 msimonetto@

This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. ? 2009 Deloitte Development LLC. Member of Deloitte Touche Tohmatsu

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