Hello everyone, I have an interview for a Pricing Analyst position tomorrow for a manufacturing company. Anyone work with this type of position before? Any advice for the interview? Just want to know how applicable it is to the CFA program in general. Its not an investment job but if similar analytical skills are used then that’s great! I’m not necessarily worried about the 4 year CFAI requirement at this point, just want a good, stable job. The goal of this position is to do research to find optimal pricing for products. Seems interesting but job descriptions can be misleading, This site has been a great resource in the past so I wanted to float this idea out to everyone. Thanks!
Do you want to be a CFA charterholder for the sake of having the letters behind your name or do you want a job out of it? If you want a job out of it, isn’t it counter-intuitive to turn down a job because it may not satisfy your CFA work requirement but could otherwise be a great opportunity? Do not see the CFA program as a hurdle in the job market, use it to compliment your career. If what you do does not qualify you as a charterholder - SO WHAT? You should analyze the job on its own - is it something that interests you, is it something with potential, who are you working for and working with, do you get along with the culture…? i mean, it’s so sad to give up opportunities because they are “not investment related” when in reality, you may NEVER find those jobs even if you pass all 3 exams. Don’t get yourself in a ditch, take the opprotunity in front of you and see where life takes you! BEST OF LUCK! NANA
sounds like competitive analysis and marketing type skills, but I think it would be very good experience. I worked with people who did this job when I was at a large manufacturer though I myself didn’t do it. There, it was considered an important rung in the career ladder for a financial analyst. This description http://www.wisegeek.com/what-does-a-pricing-analyst-do.htm#didyouknowout sounds about right. Also see this for excel skills needed
http://answers.yahoo.com/question/index?qid=20080722220035AAXf2v9
I worked as a pricing analyst for two years in the travel industry. It’s definitely interesting work and I really enjoyed the time I spent there. The skill set is transferable and looked good on my resume when I switched industries to finance (not a BSD position [hacksaw]). Excel skills are important in these roles (pivot tables are a must). There is a little bit of cost accounting thrown in (need to know the lowest you can go on a price and make profit). Need to have a good understanding of the supply and demand of your product’s market (and what drives it). Always keep an eye on the competitors and substitute product’s pricing. Know what your brand’s premium or discount is. Communication skills are important because you’ll be working hand in hand with the true brand marketing team on promotions/ads and sales on their leads and quantity they expect to sell (you will help them come up with offering prices).
When I was looking to move companies I interviewed at a car munfacturer I got questions about “How would you value our first electric car model that is debuting this year?” In this sense my CFA came into play and I considered it like a private company transaction. Take close comparison deals and normalize for multiple factors (size of vehicle, handling, speed, brand). They also wanted to know if I had experience with statistics software (I didn’t hence I don’t drive a luxury sedan for $120/m w/ insurance included).
I hope this helps a little. Just go in thinking it’s a mix of a lot of things because in my experience it was. It’s not going to be as much modeling as you expect though (depending on the product I guess). There may be some, but in my experience it was more data mining for opportunities (hence the pivot tables). I definitely got analyical, creative and managing experience in the role.
I’ll check back into this thread if you have any follow up questions. If you list the industry you’re going to work in I might be able to give more insight. From my understanding pricing is a very small industry and not many people have experience in it. If finance doesn’t work out I plan to move back into this field.
Thank you Nana
Sounds interesting, thanks for the help! If its a rung towards being an FA that’s great!
It does sound interesting. I have an econ background an enjoyed econ very much, sounds like some knowledge can be applied here. Can you elaborate a bit on the cost accounting portion?
If there is some modeling that would be great as well. I interviewed yesterday. The interviewer was in a rush so it was only a 20 minute meeting, she said she will be considering me for either the Pricing or Financial Analyst. If its a purely FP&A position I will not be interested. Think an IQ test is next so we’ll see…
That’s great. Pricing is a lot of econ - price elasticity, marginal benefit, etc. The cost accounting comes from the marginal cost = marginal benefit to find price. Depending on how your organization is structured and if you guys have a bridge to the finance department you’ll most likely work with them on coming up with cost boundaries. We came up with the fixed and variable costs of the product (to make and service to sell) to determine how low we felt comfortable going in a trough (low sales time) season. Our VP was really focused on EVA (CFA Stuff) to give perspective on pricing as well.
Another perspective to think about when it comes to pricing is time frame. In travel there is obviously more need than in other industries, but if your product can be sold in the future always be mindful of what your pricing is out on the horizon.
Will the company you’re going to work for have dynamic pricing (changes over time) or are you more setting guidelines (MSRP for Automobiles)? Do you know how your rates are sent to market or what system they use (example: When you adjust the price is it automatically reflected on Travelocity, Amazon, etc)?
Usually when you’re pricing there are multiple channels for distribution and each of these has their own price. Example: Government, Corporate Business, Retail, Third Party, etc. Pricing is very much about selling so familiarizing yourself with the distribution channels could be of benefit.
This definetly appeals to me. I have gotten an invite for a second interview and for an IQ test. I didn’t get the chance to ask a lot of questions because the interviewer was in a rush for another meeting, so I kept my questions to a minimum. She did mention distribution costs. Apparently they have lots of plants spread out throughout the US so that plays a factor as well. I will ask about the Dynamic Pricing portion next time.
As far as Cost Accounting goes, in your opinion is this facet of the work more suited for a CPA or CFA? I have a good understanding of accounting on a conceptual level and have no problem breaking down and analyzing income and balance sheets but once you get to the GL code level I’m not good at in depth analysis. This is my only concern for the position. We will be digging into the costs at the factories, thier capital requirements, and allocating depreciation to different production lines. The micro-level accounting is what really concerns me, any insight on this would be great, thanks!
So it would seem you may have to differentiate priced based on region if supply is over abundant in one area and in demand in the other. You’ll do some ROI calculations to determine if moving 100/units at X cost is worth the extra markup/unit. None of this is really CFA or CPA. Two of the people in our department were CPAs and ex-auditors, two had worked at financial services companies, but none had CFAs. Don’t worry about digging down to the general ledger you’re not the actual accountant, but it’s good to have an understanding. The role should make you focus not just on selling, but maximizing profit (which requires an understanding of cost [read accounting]). I’m just trying to convey that in this role you may use portions of corporate finance, accounting, economics and marketing (depending how your department is organized).
The cost of capital, capital requires and depreciation is what I’m referring about in cost accounting. EVA and economic profit are a big thing to bring up too. http://en.wikipedia.org/wiki/Economic_Value_Added. Remember you’re not the accountant or the finance guy. You’re suppose to act as a point of contact for a lot of different groups and make decisions with that information to maximize profit. That’s it. If you really need some information people will help you, but it’s important that you understand the concepts they’re using.
Things to know:
economic profit vs accounting profit (this is where eva comes in, cost of capital vs standard revenue - cost = profit)
balance of market share vs gross margin (one goes up the other goes down [big deal if it’s a public company with analyst targets])
Communication is also very important, because you cannot please everyone. Sometimes it requires thick skin, because I found a lot of the time one group or another were upset. Since you act as a focal point you’re an easy target. They might ask how you would diffuse a situation like that.
Ex) The finance department says that the gross margins are falling very low and they’re concerned about the upcoming quarter’s target. The corporate sales department comes to you and says that they have a big customer lined up but they need to sell the widgets at a very low margin to make the deal work. Your supervisor is concerned about market share.
Ex) The marketing team plans to run a summer sale to launch a new ad campaign and rebrand the company. Your product naturally sells at its highest point in the summer months. The bonus of the employees in your retail distribution channel is dependent on selling through their price and not a marketing campaign.
I worked as a cost analyst at a manufacturing plant when I was starting out in finance, with no experience in accounting at all other than having taken two classes for my MBA - financial accounting and managerial accounting. The managerial accounting class is the one that will be most applicable and what you are learning for the CFA will help a lot. I don’t know if this iTunes course will help but probably it can’t hurt
https://itunes.apple.com/us/itunes-u/principles-managerial-accounting/id388954264