A GUIDE FOR PRICING STRATEGIES

Competitive Pricing

What is it?

A competitive pricing strategy is a price-setting that is based on your competitors’ prices. This pricing method focuses solely on the prices of your competitors that are public, but it does not take into account how much customers value the product or production costs.

A strong competitive pricing model is based on thorough market research. When you know how the prices of your top competitors in your market and how those prices might meet customer expectations, you have a basis for determining the rates of the prices of your own products or services. Competitive pricing strategies can come in many forms, a business can choose to always be the cheapest of their competitors or always offer the average price of the highest and lowest priced competitors - they all count as competitive pricing strategies.

How to use it?

You can use competitive pricing in several ways. This really depends on your use case. Let's give you some examples of how you could use competitive pricing.

Gain Marketshare and increase revenue
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Position your products compared to competitors
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Analyse the pricing of competitors and learn
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THE GAINS

Benefits of Competitive Pricing Strategy

1

 Score new customers by implementing better prices

Positioning your products more aggressively than competitors can allow you to gain market share with popular items and become an absolute leader in the field.
2

Have more control using market research

Research the most popular products in the market to add to your inventory by checking the saturation of the market. Automatically define and adjust your prices by following competitors in order to maintain market share.
3

Make your pricing more efficient by automating your process

Checking the prices of competitors and adjusting your prices using outdated tools such as spreadsheets can be time-intensive and error-prone. Using an automated pricing tool such as SYMSON makes the process much more efficient and reduces manual labour.
INDUSTRY TRENDS

Who is using it?

Designer brands

Brands in that category want to be perceived as high-value and status products. To reach this goal, they will always want to be priced exceptionally high in comparison to similar items. Although the quality is often better than cheaper fashion brands, the increase in price is not persé equal to the increase in quality.

Amazon Essentials

These clothing products are made as part of the Amazon brand. This brand wants to be among the cheapest by offering as low as possible prices to its customers. In contrast to the designer brands, Amazon essentials use competitive pricing to be the cheapest on the market.

MediaMarkt

This is a classic example of a company that offers a “best price guarantee”. They claim to check all the prices of their products daily to make sure that they remain the cheapest on the market. Therefore, they will always match the lowest price of their competitors, to give customers the best deal possible.

HOW TO HANDLE THE CHALLENGES OF COMPETITIVE PRICING

The most common challenges pricing managers face today

  • Are you dealing with a saturated market with lots of competitors? Are you responding slowly to changes in the market, thus losing revenue? With a competitive pricing tool such as SYMSON, you can keep track of all the competitors in your field and adjust your prices automatically.
  • Is your current pricing process consisting of spreadsheets and manual work? Are you still defining your prices using gut feeling and losing revenue in the process? With an automated competitor-based pricing platform such as SYMSON, you can automate the process and respond automatically to changes in the market.
  • Are you struggling with retaining your price position because of constantly updating prices? Do you have lacking insights into your competitors and how they are approaching their pricing? With competitive price monitoring tools like SYMSON, you can gain insights into the prices of your competitors and position your product more accurately in the market.
THE DISADVANTAGES

Disadvantages and how to handle them

Difficult in a crowded marketplace

When there are many competitors, it may be hard to always be the cheapest or most expensive, because other businesses can change their prices as well. To handle this, you should automate this process as much as possible.

Data-driven and complicated process

This pricing strategy requires a lot of data, especially if you have thousands of products and many competitors. To manage all the data and changes it is best to automatically scrape data and changes from the internet - with software specifically developed to do this.

Too much focus on competition and not including other factors

While it may seem smart to copy your competition you can lose margin or revenue by not including more factors, such as customer behaviour, seasonality and price elasticity. SYMSON can take into account all your relevant price drivers in your pricing.
HOW TO SET IT UP

How to implement a competitive pricing strategy?

Watch our webinar for a comprehensive look at how competitive pricing strategy can help your organisation.

In your organization

Positioning your prices in your competitive landscape is challenging, because of the constantly changing market, conditions, and prices. Using tools like SYMSON really helps you to get insights into this pricing landscape. But the question remains for you as a company, how you should implement such a strategy. In order to do so, we recommend following these steps

Create a Pricing Plan
Get Stakeholders involved
Configure your pricing algorithm & define business rules.
Test with small groups
Analyse & Learn
Re-run this process

In SYMSON

Define the logic in the SYMSON platform to get the prices of your competitors. You could decide to configure a list of your top 10 key- competitors. SYMSON can get all the pricing data from Google Shopping or specific imports or website scrapers can be used to get the prices of your competitors. We recommend taking the following steps to implement a competitor-based pricing strategy in SYMSON.

Make a secure data connection with your chosen systems to continuously update prices
Choose your price positioning compared to competitors
Modify the parameters of the strategy and select business rules
Configure notifications so you know when significant changes in the market occur
Let the SYMSON API collect competitor data or import your own
Run the strategy and analyse the results
Modify according to the new  learnings
THE KEY IS A COMBINATION OF STRATEGIES

How to combine with other pricing strategies?

Competitive pricing strategies perform best when they are automated and become part of a dynamic pricing strategy, that changes prices when certain factors such as competitors' prices change. In addition to this, businesses should also take a closer look at the price elasticity of each of the products, this indicates the demand per product for a certain price. Competitive pricing is also a good first step in developing a key-value item strategy or in combination with business rules, as determined by the pricing managers.
GET A DEMO

How to use Competitor Pricing in SYMSON

How it works
How to combine different pricing strategies
How to get recommendations for the perfect pricing
How to track competitors

Summary

  • A competitive pricing strategy is a price-setting that is based on your competitors’ prices.
  • Competitive pricing strategies are easy and efficient to start your pricing processes with, while it is also a great pricing strategy to maintain market share with.
  • Competitive pricing performs best when it is used as part of a dynamic pricing strategy and when it is combined with e.g. price elasticity, key-value item pricing strategy or business rules.

The SYMSON Solution

The framework of the Machine Learning and AI module in SYMSON

Smart Algorithms

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