Episode #0057 - How many people really work in pricing?

We know that our listeners are interested in pricing, revenue management and boosting profits - but how many people really work as dedicated pricing professionals in Australia.

The answer is not very many at all.

Aidan and Joanna try to estimate the actual number.

 

In the last few months, we've all been experiencing quite a lot of change with COVID, the whole crisis and the government's response to it. One of those has been the serious economic challenges that we're all dealing with many people now have lost their jobs. A lot of people now are thinking about re-skilling. Some people are thinking don't know what to do and going for advice. We get a lot of people calling us asking us, "what to do next in terms of career planning?". And it's brought on the question of, how many real pricing jobs and even executives are there in Australia? Are there as many as we think? A lot of people say pricing is very niche. How niches have that become now? Or is it a growing market that people should come to?

The other thing I'd say is we often see people saying, or they're moving to Australia. They're moving territory country. Are there any pricing roles available? I have to be completely honest, there are not very many pricing jobs available. It is a small profession. It applies not only in Australia but also in many other countries, it is a small profession. We'll come up with a number later in this podcast to what we asked to be. That's the first thing I say. The second thing I'll say is a lot of roles are seen as pricing or advertised if you went to jobs board and jobs websites. They're not pricing roles in the context of which we discussed pricing. You'll often get the classic transfer pricing and currency taxation thing which is completely different. You get pricing through commodities but more monopoly businesses, such as electricity, gas, water those sorts of things. Which again is different, it's more about government regulation. When we're talking about the stuff we talked about day in day out on our podcast that category of jobs is small.

Yes and even within that small category of jobs. You might see a few pricing analysts in B2B and B2C retail advertise say on LinkedIn or wherever. But when you look closely at the job description you'll find they are not strategic pricing roles. Those are considering data or customer value and trying to unpack that to drive profitability. They're still very much on the admin side. When I say price admin sort of level very operational maybe a touch of stakeholder engagement. But very much like just maintaining the price records. Extracting data out of the system. And doing a sort of very basic margin price cost analysis. Even going down the route accountancy doing cost accounting to then allocate cost to derive a cost-plus price. You'll see that a lot but it's still more on the maintenance of an old cost-plus system. Not what we discuss on the podcast and more advanced the latest pricing strategy revolving around value-based pricing and dynamic pricing.

In another aspect, pricing the closest thing to it is probably revenue management. Through the whole COVID the crisis and the government shutdown. Just almost as if the government believes that closing down revenue management jobs will stop the spread of the illness. When you look at how revenue management was most advanced in companies such as airlines, hotel chains, cruise ships and car rental businesses. Pretty much the people who've been ground zero for this shutdown in Australia and internationally. So, that is a sector that's very much under pressure. We have to be honest about this. The skills that they have and working at value for customers optimising revenue. Those skills are used less frequently in other sectors. They probably have been growing in the supermarket's potentially some of the major supermarket chains. We have to be honest pricing is still in its infancy. One of the reasons we do this podcast every week is to spread the word. Spread news about it. Hopefully triggered some people's minds to get that moment where they realise, what pricing is? What it can do? what it can do for their career or their business?

It has been unfortunate we've seen a lot of people, especially in the cruise line business been made redundant. As a result, this is what Aiden was saying there's only so long you can keep a large bank of staff. Even if they do have highly specialised skills after a time. The company just can't afford them. So, there's some great talent out there looking to apply. Some really good skills. We do see these skills could be applied in a lot of different industries not just people's go, "oh you know that's the cruise industry that's it, we can't use those skills". I disagree with that. I think that they're bringing something new from other industries that can be easily applied to B2B. It's just a mindset change. And having that diversity and bringing those new skills in would be an enormous benefit. Especially for businesses with huge product portfolios. Just understanding and not just thinking about shifting stock. But thinking about the dynamically pricing stock. B2B is a very fixed pricing arrangement. I think the cruise line thinking could add value into more change into product and price segmentation tiers. Just logic I mean I can go into the detail. But there are so many different types of skills that could be applied. It is thinking differently now about talent. Because when you think differently about a talent you create more opportunity and growth. That's an important thing if we shut down opportunities. Then the number of people that are going to have a dead-end career in pricing is going to be huge. That doesn't need to be that way. They're easily transferable skills that can add value to different sectors.

I think certainly the cruise ship and this is one we probably cover in a future episode. That is very much discretionary expansion. People choose what sort of holiday or vacation they want to have. If COVID declines and we're back enjoying ourselves again actually living life. Why do people choose to go on a cruise? Why do they choose to spend their money where they're in an environment where they can only spend it with one company? The goal is they can choose the type of cabin they want. They can choose the number of days you want to go for etc and different locations. There's a lot of customer segmentation. There are a lot of customer value drivers that none industry has worked on and is knowledgeable about. Those concepts can apply to many other industries. One of the things I suppose what we often see as people are like when they're looking for someone to join their company. They want to see, did that person almost does the exact same job before? They probably didn't, to what benefit would it be? Well, you're not going to somebody excellent who's done something very similar. But even better elsewhere in another industry and they can bring those ideas. It's almost as if people are, you know, they're almost a few that their own business and their own industry is perfect as it is. Then the question is if it's perfect, why do you want to change it? do you not want to move to somewhere else? Having new ideas, new skills it may challenge you. But it should also add certain benefits.

It should. But I think when you bring in new skills, a new way of thinking. When you read about that in Harvard Business Review it sounds all very exciting. And you think you're that sort of person that's going to easily accept this kind of new and diverse people and skills. But then, time and time again when it comes to it. When there is a change management situation. When somebody is challenging you on a fundamental belief system regarding pricing, making money and driving growth. That disagreement can hold many businesses progress in pricing. And pricing improvement programs go nowhere that just revert back to cost-plus. But look, we're on a tangent now I'm going to answer the question in terms of, how many people in Australia do pricing? When I say do pricing, do pricing properly in terms of value-based dynamic, strategic, price setting the whole lot. I would say under 1000. People that are good possibly like 300 of those. People that know about systems like AI pricing, PRO, Zilliant all of those sorts of cool fancy systems are being brought over gradually now. I think now we've been getting to a handful of people that can do all of that. I would say overall Australia is not at level five price maturity on that well-known maturity scale from I think was pricing solutions made up. That's optimising prices using fancy systems statistical testing and big data. That would be more advanced or probably around about three sorts of managed pricing capability price management systems. In a way, a country's maturity does hold talent back. Because you can only do what you can do within a certain context framework. Whether it's an institutional framework or the pricing framework or system that you're using. But there's certainly a lot of great talent here. I can see it, we've assessed it and I have excellent conversations with people that want to try. And do their best that they can just give them the opportunity. I see some businesses are opening up the gates again looking at growth. Rather than just cost management which is great news for people in pricing. Because some great people want to do proper pricing and drive growth again. Driving growth is important for economic productivity and the whole thing. So the pricing industry and the community do a great job in building the economy. And we have to keep our mindset on growth. And value as a country to ensure that we do give people the opportunity to be productive and to do the best pricing work they can.

I think, reiterating some of those points I think in the course of COVID world, it's not going to be easy. Let's be honest we're facing an economic catastrophe. So we have to grow businesses. We have seen new businesses. We have to have that economic capitalism destruction and creation. Traditionally Australia's been seen as the lucky country in many sectors with a duopoly. Where we haven't had new grown companies come in. And aggressive new companies with new value offer. That isn't something that I would characterise Australia as really having over the last 20 or 30 years. We do need to have that. With that, we need to be focusing on innovation. We need to be focusing on the value that these companies can offer to the customers. With that, we need to be thinking smarter, working better and pricing has to be a key part of that. Because if it's not we will have the remaining hoax to offer listed companies in every sector. That will just be a managing decline in those industries as everything else gets outsourced to be watching Netflix and getting Amazon shipped to our home. Yeah, it's hard work. But it's certainly, we will do it like a challenge. I'll be honest, nobody likes to challenge. People like to give it to them on a plate. But when a challenge comes along, you have to choose whether or not you make it. That's what defines winning or losing. So I think in this instance we need to be focusing on pricing. It's a small set of 300 jobs I think that's the number Joanna give. There should be 3000 jobs, there should be 10,000 jobs. Because without those jobs, the companies won't be being profitable. And they won't be delivering profitability internationally and nationally. They will not be creating those great jobs in all aspects that companies need for a vibrant economy.

It's come to a point now where at the fulcrum point of, do we continue to reject growth and new ideas in Australia? Or do we actually go? There are people here that can do exceptional things to drive profitability using pricing by their understanding of value, by their understanding of the customer, and how they consume. I just don't know it could be as a CEO, as an executive in the business. I need that in the business to mix things up. It might not be what I agree with. But I'm willing to try it. I'm willing to see it through as long as there's a process. And they're going to put a roadmap in ahead so we can all agree on each step of the way. I'm going to accept that. Because we're running out of alternatives. And I think the growth is so much better than cost-cutting when there's so much great talent out there that can give you the value that you want as a company.