Why Retail Business Needs a Pricing Analyst?
Regardless of an industry or market segment, the pricing policy remains a core capability used by business to attract new customers and stay competitive. Hiring a price analyst or opting for pricing consultancy is definitely a good way to boost competitive intelligence. But is it really enough to receive the best-in-class pricing policy?
Being a genuine market trendsetter requires taking one step ahead of the rivals. What it means is that an analyst or consultancy agency can hardly bring the expected result as long as pricing software is ignored.
Let's start with the essentials and see how pricing intelligence can boost the business.
What is a pricing analyst?
Pricing analyst is a person responsible for defining the best prices for a product or product range. In addition, price analyst shapes the strategic course of pricing policy based on marketing trends, company’s goals, and available resources.
According to McKinsey, all companies could be grouped into four categories based on their pricing policy. These types include margin expanders, sales and pricing pioneers, revenue drivers, and pricing disrupters. Price analyst helps the managers to compare the pros and cons of each type of policy and choose the most sustainable approach.
What does a pricing analyst do?
Pricing analyst looks closely at industry trends, collects the relevant data, and provides highly accurate analysis for the managers. Price analyst also monitors competitors' pricing strategies to validate the final recommendations. An awareness of general economic trends, market developments, and consumer habits is a must for an effective price analyst.
The set of tasks may vary across the markets, yet some responsibilities are shared by most effective price analysts. Before launching a new project or initiative, price analysts usually perform complex margin and pricing analyses. In addition, analysts build a system of communication with other departments and stakeholders to review internal and external pricing data regularly.
How to become a pricing analyst?
A price analyst needs to have a profound educational background. A degree in math, finance, marketing, statistics or accounting fit the job requirements best. Work experience as a junior pricing analyst or finance officer is also essential. An analyst’s soft skills are remarkably important as the advanced software can nowadays do all kinds of complex calculations instead of an analyst.
The everyday routine of a price analyst is more about building a communication strategy with the pricing policy stakeholders rather than dealing with mechanical calculations. Therefore, being familiar with the dynamic pricing software is a crucial factor reinforcing one’s chances to succeed as a pricing analyst. In turn, an employer’s awareness of the game-changing role played by pricing intelligence should be examined by an analyst during the interview.
Pricing consultant vs. pricing analyst
Pricing consultancy is another option commonly used by the business willing to boost their pricing policy. The consultancy services are commonly provided by large agencies with a firm reputation and profound expertise in the market trends. Often, yet not always, the external pricing consultants are hired for a short time period to resolve a specific issue.
The typical tasks of a pricing strategy consultant include finding invalid discounting behaviors, identifying market segments with a higher purchasing power of customers or developing sales compensation plans stimulating better pricing behavior. Hiring a reputable pricing consultancy firm is expensive, that’s why the business prefers an in-house pricing analyst more often.
Why pricing analysis software is inevitable?
Now, let’s think again how exactly can a price analyst help your business. At many companies, price analysts or pricing consultants are still involved in plenty of mechanical tasks. At first, they mine raw data in either manual or partially automated way. Then, the data is processed, verified, and classified appropriately. Finally, an analyst is supposed to build predictive models using the collected data.
This pattern dominates across businesses even though it requires an analyst to spend most of the time doing mechanical tasks. The manually processed data often lacks an accuracy so the predictive models are built on initially invalid inputs. Hiring a price analyst to process data manually not only is a waste of money but may also undermine the company’s financial health. The good news is that the pricing intelligence software can now do all mechanical work instead of and better than analysts.
With the advanced software solutions, you can get a customized and highly accurate data on competitors’ pricing, stock, and promo. The pricing software can also perform advanced analytics to sustain a goal-driven pricing strategy. Using price intelligence software alone, the business can boost profit margins by 5% and increase sales by 15%. Now, the only thing left for a price analyst is to bring the ML-driven recommendations to life.