Pricing plays a crucial role when it comes to the consumer decision of buying a product/ service. It can be challenging for your business to come up with the best prices for your goods/ services irrespective of whether you run an e-commerce business or an offline shop. New companies can relate to this challenge all the more as they are presented with the task of pricing products in a competitive pricing intelligence. market for the first time.
The price set for your product/ service will have an impact on every aspect of your business such as cash flow, business expenses, profit margin, product positioning in the market, and more. Therefore, choosing the prices wisely is crucial for any business, especially for scalability and beating competition in the industry. Fortunately, businesses can take resort to a tried and tested method known as competitive pricing intelligence.
With the help of competitive price intelligence, you can make sure that your pricing strategy remains market-relevant and that the buyers are less likely to shift to your competitors.
They are more likely to choose you over others and stay loyal for a long time. If you are not aware of the competitive pricing strategy, today we will have a look at the details.
What is a Competitive Pricing Strategy?
Competitive pricing is all about selecting the prices strategically for your goods and services depending on the competitor pricing in your niche. It is not solely based on the business cost and profit margins. Competitive pricing is used by companies that sell similar products in the same market as theirs that too for a long period. Therefore, the prices of these products reach a level of equilibrium. WebDataGuru is one of the experts in providing competitive pricing intelligence solutions to varied clients.
Competitive Pricing Intelligence Strategies
The competitive pricing intelligence strategy can be applied to the business in the following ways:
1. Lower the Price
In this strategy, the prices of the goods and services are lesser than your competitors. The strategy can be beneficial for businesses that can capitalize on economies of scale. The lower price can also be applied as a part of the loss leader strategy.
This strategy is usually implemented by companies that are just entering the market for the first time. The strategy works on the idea of setting lower prices for the products and services so that there is less or no profit but it brings in new customers. It might also help the business in selling additional or profitable goods/ services to the customers.
Competitive intelligence can help you identify the market changes and the product prices of your competitors. After that, you can analyze every aspect of the price and enter the market with a lower price and the same product offering.
2. Setting Higher Prices
In this strategy, the prices of your goods/ services are set higher than your competitors in the niche. This strategy is appropriate for businesses that offer goods and services with additional features and benefits than competitors. Higher prices are used by businesses that have an established reputation in the market and they offer premium/ luxury products in comparison to their competitors.
For instance, if you go to buy a luxurious car say, BMW. You know that the cars which come in this category are going to be priced higher than the others. This is the marketing strategy of a company. BMW has a particular audience who will spend money to possess one as it is a mark of status and also the best quality automobile. So, here the prices are premium, and then with time the company reduces the price and launches a new one, thereby opening the market to a different income segment.
3. Price Skimming
When any business introduces a new product or service in the market, price skimming can be used as a way of competitive pricing strategy. It is the technique of charging the highest price for the product that your customer will pay during higher demand and then lowering the price gradually. Once the expected revenue is earned and competitors begin to enter the market, businesses can start lowering their prices for attracting new customers who are cost-conscious. This enables your business to stay competitive against the competitors who deal in the same kind of products.
4. Equal Prices
The price of your goods and services are priced equal to the competitor’s pricing or the current market price. The businesses that sell their products at the same price as their competitors try to get an edge over them by offering a unique shopping experience and adding unique features to the products such as sustainable material/ manufacturing processes, eco-friendly, etc.
Now, equal prices don’t mean poor quality. It simply signifies that you are providing the customer a wider range of choices and which ultimately helps in creating brand loyalty. In simple words, if you have a brand loyal consumer then there are chances that an increase in the price will still not make you lose them. So, all kinds of pricing strategies work towards this particular agenda.
5. Price Matching
If the businesses are not able to collect, analyze, and act on the competitive pricing, price matching can be a good strategy for them. This enables the businesses to stay competitive in their niche without following the competitor’s pricing or updating their point of sale.
Pricing matching tools like WebDataGuru offers can be very beneficial for your business. Price matching is important if you need to stay ahead of your competitors. You also will need a constant study of consumer behavior. This will make your business thrive in the most challenging times as well. Price matching is mostly done by online businesses that want to stay relevant and come up with new solutions all the time.
Price matching is done in many offline stores also. If you provide an online platform’s offer price, the stores match the price to ensure a sale on time. This can be risky as you have to keep your costs lower to ensure a lower price. Pricing intelligence can help you understand this very thing and enable you to compete with the big giants. Now, that’s what a healthy economy looks like!
Benefits Of Competitive Pricing
Let’s have a look at how online pricing intelligence can benefit your business:
1. Helps In Increasing Traffic
Irrespective of whether you are a start-up or an established company, getting traffic to your business can be challenging for both e-commerce businesses and retail stores. Getting more traffic is the key to giving your brand an edge over others. With the help of a competitive pricing strategy, you can also implement discount strategies like offering low prices than a competitor or loss leader strategy which can help in attracting more customers and lead to more sales.
2. Preventing Market Share Loss
Competitive pricing tactics can help those who implement pricing software for capturing competitor data and enable you to assess and react to the price changes that your competitors introduce within a wink of an eye. This not only helps in making strategic decisions but also helps in preventing market share losses. You can ensure that your prices remain relevant to the market and your shoppers don’t turn away from your competitors.
3. Improve Profit Margin
There is yet another benefit of setting your prices lower than competitors. This means that you have scope for raising your prices while still staying competitive and improving profit margins. This can especially help businesses with unique selling propositions. If you can uncover specific attributes of the product such as unique packaging, additional accessories, etc. it can offer more value to customers and make them willing to pay more.
4. Deploy Dynamic Pricing Strategy
With a dynamic pricing strategy, you can regularly adjust the prices in real-time depending on the variables like market demand, cost of raw material, season, inventory, freight cost, etc.
From the above-mentioned information, it is clear how beneficial competitive pricing intelligence can prove to be for any business. You can select the appropriate strategy based on your products, profit margin, and other factors. When chosen well, these tactics can help in increasing your sales and revenue.
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