An Open Competency Model for Pricing Expertise
By Steven Forth
In 2018 Ibbaka partnered with TeamFit to research emerging skills in pricing. The growing demand for pricing experts, changes to revenue models (especially the rise of the subscription economy) and the introduction of new technologies (AI and specifically machine learning) was changing the skills needed for pricing expertise and opening new job opportunities and career paths.
We have continued this work, helping our clients build up their own pricing expertise and investing in our own training and development. The trends we identified in 2018 have gathered force and are pushing us to take this work to the next step.
What is the next step?
In February 2020 Ibbaka will publish a competency model for pricing expertise. Specifically, this will be an open competency model, one of four that we will be publishing in February of 2020.
Pricing Expertise
Customer Success
Design Thinking
Adaptation to Climate Change (with the ResilienceByDesign Lab at Royal Roads University)
These models are open in that …
They are made available under a Creative Common license (so you will be able to use and modify it without paying us any money)
They are meant to evolve with use
They are modular and parts of one can be used in another
A pricing competency model needs to be modular and open as the pricing function interacts with many other functions. There are many jobs in which pricing competencies are important. Some examples include
Product and service managers need a good understand of pricing in order to guide development and choose priorities. In many cases they will be expected to set the basic approach to pricing. Few product or service managers have been trained to do this.
Revenue and sales leaders need to understand value and pricing if they are not to be crushed by the negotiation experts in procurement.
Customer success managers and leaders (note that this is one of the competency models we are developing) need to be focused on value to customer and then making sure that there is a return on the customer success investment. This requires pricing competencies.
Part of the power of pricing is that it is where all of the different parts of the business come together. Good pricing is based on the value delivered. Value is relative to the alternatives and is in the eye of the customer. Market segmentation, customer targeting, offer packaging and pricing are all tightly connected which we illustrate in our value graph.
There are many ways to design a competency model, but in most cases the model will usually include Jobs, Roles, Behaviors and/or Tasks. Skills are the atoms of competency models. They are what connects all of the other pieces.
The structure of a competency model
One open question about the Pricing competency model is whether it should include values. The Design Thinking model will, because when we surveyed the design thinking community some 70% of people believed that it should.
Some of the Roles we are considering for the Pricing competency model are as follows:
Pricing leader
Pricing coach
Pricing analyst
Pricing AI analyst
Pricing designer
Pricing sales support
Pricing deal desk
You can let us know what is missing by taking the survey or sending an e-mail to info@ibbaka.com.
The granular level of a competency model is the skills.
We put skills into a skill graph that defines the connections that skills have with each other. The four key connections are …
Associated skills: the two skills are generally found together in the sames person - Economic Value Estimation and Value Analysis are associated skills
Complementary skills: the two skills are frequently used together, but often by different people - Price Negotiation and Pricing Data Analysis are frequently used together but there is no reason to expect the same person to have both skills
Parent skill: the high level skill, Pricing is the parent of the Pocket Price Waterfall and Economic Value Estimation
Child skill: the more specific skill that inherits properties from a higher level skill - Price Dispersion is a child skill of Price Segmentation
We will be demonstrating how it can be used to build pricing capabilities at the Spring 2020 Professional Pricing Society conference.
