If you have a fairly solid grasp on your product’s quality, target audience and cost of production, this method will most likely never lead to bankruptcy.
It’s rare to royally screw up using this form of pricing, even in a competitive market.
Competitor based pricing strategy software#
Remember, this gets much more complicated when there are no congruent goods to price match, which is often what happens in the software space. It is also possible to make adjustments in prices by following tweaks made by competitors. In most industries, marketing and product managers will have to do relatively little research to find a competitive price. If you’re in an industry with even one or two direct competitors, you can implement a reasonable competitor-based pricing strategy. To understand this method, let's examine what it entails and uncover the competitive pricing advantages and disadvantages before exploring who should and shouldn't utilize this tactic. Data eliminates that space as much as possible, with information about your competitor's positions in the market, to get as focused on the target as possible. Think of pricing as a game of darts where you’re trying to hit a bullseye (the perfect price), but there’s all that extra space on the board.
Remember, pricing is a process that eliminates as much doubt as possible for a key stakeholder to make a profit-maximizing decision. We elaborated on this assertion in our pricing strategy post, but the key is that a 1% improvement in price optimization results in an average boost of 11.1% in profits - a huge impact!Ĭompetitor-based pricing can help you get there if done correctly. No other lever has a higher impact on improving profits. Pricing is the most important aspect of your business. Our first post was about cost-plus pricing. competition-based pricing or price intelligence). This post concerns competitive pricing (a.k.a. Welcome to the second post in our series on key pricing methodologies, highlighting their pros and cons.
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