2023 has bombarded the world with the onset of AI’s left, right and center. Pricing also does the same for every business. It helps the business grow from every side. And can also lose the business from every side if done wrong. Yes, that’s why pricing strategy plays a crucial role for every business. It is one of the 4Ps of marketing namely- price, promotion, product, place. The pricing strategy can be developed only after considering several factors as your target market should be able to resonate with the price. It is here that competitive pricing analysis comes into the picture.
Also, the price point should allow you to make a good profit. A business must also consider the prices charged by the competitors in the industry.
What is Competitive Pricing and Analytics?
Competitive pricing analysis is an evaluation of how customers react to the new prices set by a business. It is done via research which is based on historical data and polls. Pricing and analytics assess the customer’s response to a specific price point without considering the cost or potential profit. After the competition tracking and price analysis is done, the pricing analysts make use of these findings for coming up with a competitive pricing strategy.
A business can benefit from competitive pricing analysis software as it automates the process of collecting customer data and competitive pricing analysis it for getting actionable insights. These insights help in creating a competitive pricing strategy. Typically, a competitive pricing strategy is the policy that is based on the competitor’s prices as a benchmark for setting prices. This type of strategy is referred to as competition-based pricing as well. In most cases, a business turns towards the competitive pricing strategy when the cost-plus approach remains no longer relevant.
How to Conduct Competitive Pricing Analysis?
1. Quality of Data
The first step is to determine the quality of data as complete and accurate data is important for analyzing the competitors. A business must collect thorough data for in-depth comparisons.
Inaccurate data also increases the chances of errors as the data matching is done using automation. It is also important to consider the ratio of planned and delivered data. Sometimes, data can be incomplete if the algorithm lacks information not available on the competitor’s website. It leads to discrepancies between expected and delivered data.
The collected data should be used within two hours of analysis and re-pricing as the data gets updated constantly.
2. Define Data Parameters
A business should determine significant parameters of the competitive data they wish to collect and analyze for the pricing process. Here’s a look at some pricing analysis examples that show what parameters are usually monitored:
- Price Index
It reflects the retailer’s position in the market as far as a specific product is concerned for a particular period of time. The price index visualizes how market dynamics can impact sales and deliver data on prices listed by competitors.
- Competitor’s Promotional Activity
According to studies, at least one-third of the customers try to find discounts before buying an item. It is important to constantly monitor the discounts and sales of the competitors in the industry for optimizing promotional offers.
- Product Availability
By monitoring competitors and their stock, a business can adjust its prices depending on the supply of a product in the market at a specific point in time.
3. Identify the Target Market
An important factor that helps in determining the price is the target market. Apart from the demographics and their buying capacity, you need an idea of how the target market responds to the price. They might be price sensitive based on the industry. If you are a part of the niche industry, you can attract price-sensitive buyers. However, a competitive market will ask you to prove your value to the customers upfront by offering competitive pricing or differentiating yourself from the competitors. Having an idea of the market and whom you are competing against is the major factor in determining the pricing strategy.
4. Categorize Competitors
Once a business has complete data about the competitors, it is time to classify them based on several factors such as target audience, product quality, and more.
There are three main categories your competitors can be divided into:
These are the direct competitors that focus on the same customer category.
These competitors focus on the upscale or downscale version of your products. Competitive pricing analysis of this sector helps the business develop a broader idea of their position in the market.
These are the competitors selling products relevant to yours. Competitive pricing analysis of this category enables a retailer to expand its assortment.
5. Analyzing Pricing Structures
Every company has a pricing model or pricing structure in place. Observing and knowing the competitor’s pricing structures is very vital for your strategies. PriceIntelGuru provides the best platform for such analysis and helps you dive deeper into the competitor’s pricing structures. Starting from their pricing models, subscriptions, deliveries, bundled packages and much more.
Now let us explain why you need to know these aspects for your company’s strategic conduct.
Firstly, the competition you study has to be working in the market and that’s why you know that it is a tried and tested move.
Secondly, understanding their structures enables you to understand any kind of loopholes and then create an opportunity for your business.
And finally, when the pricing structures that you study reap results, then you know that working towards such phenomena can help you gain better customers and retain them for a longer time. That makes sense, right?
6. Compare Price Points
To begin with, compare the prices of similar products or services across your competitors. Identify any pricing differentiators, such as higher or lower prices for specific features or benefits. Also, take note of any promotional offers or discounts that may influence consumer behavior. Consider factors like quality, brand reputation, and customer service to assess how pricing aligns with perceived value.
These are tried and tested pricing analytics techniques that can help any business in setting right pricing strategy for their products.
Importance of Pricing Analytics Software
It can be challenging to gather data on competitors manually as it is time-consuming and cumbersome. Competitive pricing analysis software can automate the entire process and offer accurate results saving time and money. It is a quick process that helps in making and implementing the pricing strategies efficiently.
1. Comprehensive Data Accumulation
Data extraction is a tedious and long process. Experts like WebDataGuru can help you or else, you will be in the longest loop of collecting data from everywhere with so much inaccuracy.
Price analytics helps in acquiring significant insights in quick and accurate manner along with the data gathering. Additionally, you can have access to so much information from varied sources in multiple formats and also decipher the same with the help of our platform.
2. Comparative Pricing
You can identify quick pricing wins. Let us elaborate. Basically, when in the online market, you are always involved in some kind of pricing war. With the help of analytics, you can always stay at the top of the game.
3. Price Points
It helps in finding which pricing range works best for you. Every product works in different ways for your business. That is a known fact. But what is more surprising is that every product works differently in different price ranges too. It basically works with the buyer’s psychology and helps drive sales. It also can make your customer go away. So, the platform will help you identify the best possible manner you can make pricing work for your business for every product/ service.
4. Monitor the Best Performing Platforms
You can discover which channels are most profitable for you. As you may be present on many eCommerce channels, not all reap equal benefits. So, with the help of the platform, you can know where you lag behind and where you shine the most. This can help you make strategies work in the most efficient manner.
5. Ace the Marketing and Promotions
A business can plan promotions based on the data received. Promotions and pricing go hand in hand. If the pricing is right, you can promote and get the best results without any doubt.
How to Price a Product?
For any business regardless of the industry and size of the operations, it is imperative to conduct pricing analysis using different pricing analysis methods. It is not possible to determine the price of any product without taking into consideration what the competitors are charging for similar products.
A pricing strategy that doesn’t consider the competitor pricing can’t sustain in the market for long. Customers will switch to a business that offers competitive price. If you price your product too low, you won’t fetch the desired profits and setting higher prices will lead to losing buyers to competitors.
Equip Yourself With the Best Tools
By keeping a close eye on market leaders, tracking pricing strategies, and gaining valuable customer insights, you can equip your clients with the knowledge they need to make informed pricing decisions. Don't miss out on the opportunity to stay ahead of the competition and maximize your client's profitability.
Now, it's time to take action. Start monitoring the best-performing platforms in your industry and leverage the insights gained to refine your client's pricing strategies. Whether it's identifying market leaders, tracking price fluctuations, or gaining customer insights, the power to drive success lies in your hands.
So, don’t wait any longer. Book our free demo today!