Every company has questions related to pricing: How should products be priced? How does pricing affect customer behavior? How will pricing affect sales and revenue forecasts?
A pricing analyst’s responsibility is to answer questions like these, using data-driven insights to back up solutions and choices. Pricing analysts monitor and analyze the pricing of products, services, or commodities to ensure that the prices are competitive and beneficial to the organization. The primary responsibility of a pricing analyst is to understand the market forces that impact pricing, such as competition and customer preferences.
Pricing analysts are also responsible for forecasting and anomaly detection (e.g. identifying pricing errors or changes in consumer behavior), as well as collaborating cross-functionally on the market and financial analyses.
Ultimately, the role of pricing analysts fits under the data analyst umbrella. But there are some key differences in skills and scope that make this role unique. We took a closer look at pricing analysts to answer:
Simply stated, a pricing analyst is responsible for researching and analyzing the costs and pricing of the products or services provided by a business. Analysts make recommendations to the management team regarding current and future pricing strategies.
Job functions of a pricing analyst include:
How do they do these tasks? Mathematics and statistics play an important role in pricing analyses. For starters, a pricing analyst looks at industry databases, catalogs, and other industry sources to track pricing trends and consumer habits. They’re also interested in profit margins, and therefore, must know how product positioning, marketing, and manufacturing costs can affect price.
Ultimately, a pricing analyst’s core responsibility is maximizing profitability. A successful pricing analyst can help a company find the sweet spot: the highest prices for its products that generate the greatest sales volume.
Pricing analysts need to be business-savvy and have a good understanding of economics, statistics, and other areas of business administration. They also need to be strategic thinkers who can look at all aspects of the marketplace, including customers, competitors, and suppliers.
The specific skills required of a pricing analyst will vary from position to position, but many employers seek candidates with the following skills:
Analytical skills. Pricing analysts must be able to gather data from a number of sources, process it appropriately, and apply appropriate metrics to make sense of it. They must be able to understand trends in large sets of data and use that analysis to answer questions or solve problems.
Core competencies include: Pricing analytics tools, SQL, Microsoft Excel, and database management tools.
Communication skills.Pricing analysts work with different levels of management within their organization, as well as with vendors and customers. They must be able to write reports that clearly explain pricing structures or strategies, as well as present complex information in an accessible manner during meetings or presentations.
Core competencies include: Data visualization tools, Tableau, and presenting tools.
Critical-thinking skills. To successfully analyze data and make recommendations regarding pricing strategies, pricing analysts must be able to assess various scenarios and determine which is most likely to achieve the desired outcome for the organization. They need to use logic and reasoning when evaluating alternatives; for instance, if several options are available for introducing a new product or service.
Core competencies include: Product/business sense, statistics and probability, economics, and consumer psychology.
Pricing analysts and data analysts have almost everything in common. The few differences that exist are typically minor and tend to reflect a company’s particular needs. For example, a pricing analyst might be expected to have more experience with specific pricing analytics software, while a data analyst tends to require more general analytics knowledge.
Similarly, a pricing analyst needs to know more about financial instruments and pricing psychology. Seasonality, trends, and forecasting are more specific skills that a pricing analyst needs, compared to data analysts with a more general skill set.
Pricing analysts are just more of a specific kind of data analyst that specializes in analyzing pricing for companies.
In short, the terms pricing analyst and data analyst can be used interchangeably in many cases. Generally speaking, though, a pricing analyst is more likely to focus on a narrowly defined problem (such as how to price a specific product or service), while a data analyst is more likely to be responsible for building generalized tools for an entire company that could then be applied to many different problems.
Some job functions that are unique to pricing analysts include:
1. Customer Behavior Analysis - Like data analysts, pricing analysts perform quantitative and qualitative analysis to monitor KPIs and assess market share and margins. They also need the ability to understand how price affects consumer behavior. Pricing analysts should know what drives customer behavior, how customers value a product, and how this can be used to develop a marketing strategy.
2. Forecasting and Probability Modeling - Pricing analysts focus on demand forecasting and probability modeling as it relates to pricing. Therefore, their analysis is laser-focused on identifying revenue and margin opportunities.
3. Marketing Strategy - Although data analysts work cross-functionally, pricing analysts are usually more firmly embedded within marketing and sales teams. They work closely with marketing/sales to develop competitive pricing strategies through generating insights that drive growth.
4. Market/Industry Analysis - Pricing analysts must have a strong command of the business landscape and understand how sales cycles and consumer trends affect sales. A pricing analyst can perform deep competitive analysis to quantify the differential value of your product and help to define the unique selling propositions for sales and marketing.
5. Anomaly Detection - Pricing analysts have the keen ability to spot anomalies in data, especially in relation to how these anomalies relate to pricing and consumer behavior.
A job in pricing analytics can be highly rewarding. Pricing analysts can have real-world impact on revenue, and they have the opportunity to work on interesting problems and perform interesting analyses.
Ultimately, if you’re considering a career as a data analyst or a pricing analyst, here’s one thing to consider: Social science plays a big role in pricing. Pricing analysts must be passionate about consumer psychology and be excited to analyze problems like “what effect 50% off vs Buy One, Get One Free can have on sales.”
To be successful as a pricing analyst, you should:
The educational requirements for pricing analysts vary depending on the employer. Most employers prefer candidates that have a bachelor’s degree in finance, economics, or business administration, but some may accept candidates with degrees in other fields if they have relevant experience.
Pricing analysts should also have excellent computer and communication skills. They should be proficient in various coding languages like SQL and Microsoft Excel, as well as statistical analysis software like R or Python. Pricing analysts must also be able to communicate effectively with coworkers and clients.
If you’re interested in a career in the field, here are some steps to take to become a pricing analyst:
1. Undergraduate degree- Most employers require at least a bachelor’s degree. In particular, fields like mathematics, finance, marketing, accounting, or statistics have the greatest overlap with pricing analytics. Social science degrees, particularly in psychology, may also be applicable (as long as you’ve taken the time to develop the necessary technical skills).
2. Develop your skillset - Even as an undergraduate, it’s important that you start developing the technical skills you’ll need in the field. A few of the most important skills include SQL, Python, R, and Microsoft Excel, as well as statistics and probability. Many of the technical skills can be self-taught or learned through a minor. Similarly, start reading up on pricing and marketing psychology, and develop specific domain knowledge on the subject.
3. Gain experience - Internships are one of the best ways to gain practical experience. Marketing, finance, and analytics internships can all help you to prepare for your first job in the field and practice key technical skills. You don’t necessarily have to intern as a pricing analyst; instead, use internships to gain real-world experience and build your resume.
4. Build your portfolio - Analytics projects are one of the easiest ways to practice. But they can also be used as a marketing tool to land an interview. In particular, look for pricing analytics projects on Kaggle or develop your own. Then, publish your insights on a blog or Medium.
5. Land the interview - Pricing analyst interviews tend to follow that of data analyst interview questions. They have technical rounds focusing on skills like SQL or Python, as well as interviews that focus on behavioral questions and pricing psychology. Develop your ability to interview and practice lots of real-world data science interview questions.
Ultimately, you may want to consider a master’s degree. This is especially important if you’re making a dramatic career change. A Master of Business Administration (MBA) offers the most opportunities for employment in pricing analytics, but pursuing degrees in statistics, finance, accounting, or marketing will also make you more competitive.
Data analytics is one of the fastest-growing fields, and as more businesses make digital transformations, they’re always on the lookout for talented professionals that can turn data into insights. In particular, demand for pricing analytics professionals is most common in these industries:
Here are some examples of pricing analyst jobs with average salaries:
Senior Analyst, Domestic Pricing - Delta Air Lines
Pricing analysts in the airline industry are responsible for identifying “revenue-maximizing pricing strategies” for various markets. In particular, airline pricing analysts look at pricing segmentation, fare structure, and competitive positioning, as well as maintaining competitiveness in fares and pricing policies. Airline analysts work closely with inventory management, network planning, and other commercial divisions. Senior pricing analysts at Delta make an average of $86,266, with most jobs based in Atlanta, GA, Delta’s commercial hub.