Competitor based pricing is commonly used to test product pricing, especially if you’re new to the market. It requires thorough research on what your competitors are doing, what they offer and at what price they offer in order to arrive at your own pricing strategy. When you’re just starting to acquire your first few customers, there might not be enough data to understand the pricing fit from your customer base. Therefore, your competitor data which has been in the market for a while can aid you with the same, while testing the waters. Show
How is competitor based pricing calculated?In order to arrive at a pricing decision, group your competitors together according to relevance in ascending order and see where your product and brand fits in the range between them. In a competitor based pricing strategy you have two different types of competitors you need to be aware of while grouping them together, they’re
After finding out your product fit in the market, you need to now understand competitive pricing and analyze how to price the product. There are three methods as to how you can price your product after doing a thorough analysis of your competitors
Advantages of competitor based pricing
Disadvantages of competitor based pricing
Is competitive pricing analysis right for SaaS?For many SaaS businesses, competitor based pricing may not be the right pricing model. It can be combined with another pricing model but not solely used as a stand-alone pricing metric. Also, the biggest setback is the fact that you’re pricing is based on your competitors' pricing method. The price doesn’t equate to the value you’re providing for your customer. It doesn’t do justice to your product offerings and the value of your product will get diminished with the crowd. If you aren't perceived for your value as a product, your customer might not think twice to choose your competitor's product for a similar price. In addition, you will be having no price intelligence as to why a particular set of features are bundled together and offered for that specific price. Competition based pricing is a bad case of plagiarism when implemented alone and will help you sustain in the market only for a short while. ConclusionSome businesses in the B2C space, especially E-Commerce might be wholly dependent on competitive pricing but in B2B SaaS, competitor data shouldn’t directly translate as a central focal point for your pricing strategy. There are variables that need to be considered such as value and the extensive functionality of what your product can do and accomplish. With competition based pricing you’ll be able to keep up with your competitors in the short term but when it is properly used in conjunction with other pricing models it can be a valuable addition to your pricing strategy. What is competitor oriented pricing?a method of pricing in which a manufacturer's price is determined more by the price of a similar product sold by a powerful competitor than by considerations of consumer demand and cost of production; also referred to as Competition-Based Pricing.
Which of the following is true about competitive pricing?Which of the following is true about competitive pricing? It is at a medium level, somewhere in between extremes, using competitors' prices as a starting point, and adjusting from there.
What type of pricing strategy is best for competing companies?1. Competition-Based Pricing Strategy. Competition-based pricing is also known as competitive pricing or competitor-based pricing. This pricing strategy focuses on the existing market rate (or going rate) for a company's product or service; it doesn't take into account the cost of their product or consumer demand.
What is true about the pricing strategy concept?Pricing strategy refers to method companies use to price their products or services. Almost all companies, large or small, base the price of their products and services on production, labor and advertising expenses and then add on a certain percentage so they can make a profit.
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