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What has been said about pricing that you don’t know? Everybody has a clear idea that pricing plays a crucial role in any business. But did you know that an effective pricing strategy helps in achieving business goals as well as building trust with the customers? Now, pricing reflects the value of a product and buyers judge the products/ services based on that price. So, eventually, right pricing can help a business earn significant revenue and profit margins.
Pricing happens to be an important aspect once the product is manufactured. Competitive pricing solutions can help a business in setting ideal price for its products/ services. PriceIntelGuru’s competitive pricing solutions have always paved the way for businesses to grow. In today’s blog, we will be understanding how that happens. So, let’s dive right in.
What is Competitive Pricing Strategy and Pricing Solutions?
Competitive pricing is the technique of choosing the price points strategically to benefit from the product/ service-based market. The pricing technique can help a business that is operating in a market that sells similar products as services can differ from one business to another. The pricing strategy is usually used when the price of a product has reached the equilibrium. It happens when the product has been in the market for a long time and there are alternatives to your products.
Basics of Competitive Pricing
A business has three options while setting the price for the goods and services. As a part of the competitive pricing solutions, a business can set the price lower than competitors, at par with the competitors, or above the competitors.
Above the competition pricing strategy needs a business to create a scenario or environment that brings a sense of luxury or premium. It can be in the form of additional features or services such as payment features, extra services, etc. Instead of competing on the price, here a business competes on the quality so that it can charge a premium.
A business sets the price below the market and suffers from initial loss as it is believed that the buyers will pick additional products from their business once they get to know about the other offerings by the business. The profitability margin of the other products might make up for the economic loss on the products priced below the market. It is also known as the loss leader strategy.
A business can decide to set the same price as the competitors or use the prevailing market price as it is. Despite of selling a similar product at the same price, the business can differentiate itself via great marketing strategies.
Premium Pricing
A business must differentiate its product from the ones by the competitors to charge a price above the competitors. For example, Apple focuses on the creation of high-end products to make sure that the customers see the product as innovative and unique. This type of strategy needs a business to improve the product/ service along with making sure that the buyers are aware of the difference which justifies the premium pricing. It can be done via effective branding and marketing strategies.
Loss Leaders
The loss leader strategy is about offering the product/ services at a significant discount. It can at times lead to losses as the product is sold lesser than the cost. The technique aims at increasing the traffic to the business with the low price of a product/ service.
Once a potential buyer enters the store or explores the web page and they are done buying the loss leader product, a business hopes to attract them to other products to balance the profit. It can help in attracting new buyers to the store and help a business move the inventory which had become stagnant.
Example of Competitive Pricing
The competition between cold drink brands Pepsi and Coca-Cola is well known. It is a perfect example of competitive pricing. Both the brand constantly monitor pricing and promotional strategies of each other. It helps them stay competitive and adjust their prices accordingly. They offer various promotions and discounts to attract buyers.
Yet another classic example is Uber and Lyft. The two cab services constantly engage in a price war to attract more customers. They lift their prices depending on each other’s pricing strategy, promotions, discounts, etc. They even surge prices to stay competitive. The cab services use algorithms for monitoring the competition and market as it helps in adjusting the price in real-time.
How Competitive Pricing Solution can help your Business?
1. Prevent Market Loss
Pricing is an important decision made by a shopper when they are looking for a product/ service. A business might have a great product but if the buyers don’t find the prices competitive, they are likely to buy the product from a competitor. Competitor pricing solutions make sure that the prices are set with a thorough understanding of the market.
It doesn’t always mean a business must have the lowest prices. It can be above, at par, or below but the prices should be within a range that the customers are willing to pay happily. As mentioned above, if the prices are higher than the competitors, a business needs to justify the difference.
2. Increase Profits
Whether you price the product/ service above, below, or at par with the competitors, each approach can bring profit to the business. If the buyers are willing to pay more for the products, you can make greater profit on each sale. For pricing below or at par with the competitors, a business relies on economies of scale. They need to find the ideal spot where they can make as many sales as possible to boost the overall profit margin despite making a lesser profit on each sale.
With competitive pricing analysis, a business can set a lower price for selective products than the competitors and act as loss leaders to make a profit with other products.
3. Simple and Low Risk
The competitive pricing model needs less effort. It only needs some research which can be done with the help of the latest competitive and pricing intelligence solution. Regardless of the strategy you use, the prices will be set well within the acceptable range that buyers are ready to pay. Just avoid pricing the product/ service too high without enough justification for the difference.
Benefits of Competitive Pricing Solutions
1. Precision in Pricing
Adopting data-driven pricing solutions enables businesses to set prices with unparalleled precision. These solutions analyze a myriad of factors including market trends, consumer behavior, and competitor pricing strategies. As a result, businesses can optimize their pricing structures to capture maximum value, thereby boosting revenue margins.
2. Real-Time Market Insights
Traditional pricing strategies often rely on historical data and periodic market assessments. In contrast, data-driven solutions provide real-time insights, allowing businesses to react swiftly to market fluctuations and consumer behavior shifts. And further, this agility is invaluable in seizing growing opportunities and mitigating potential risks. Isn’t that wonderful!
3. Improved Customer Perception and Enhanced Experience
When it comes to fair and competitive pricing, PriceIntelGuru can help you achieve that in just a few clicks. Also, when customers put faith in your brand, they can help you thrive in all dynamic markets. Moreover, it fosters trust and confidence among the customers. Also, isn’t it good for a brand when consumers perceive that they are receiving value for their money? As it enhances brand perception and customer satisfaction. Satisfied customers are more likely to become brand advocates, ultimately leading to increased referrals and a broader customer base.
4. Competitor Benchmarking
Understanding how one's prices compare to competitors is paramount in a crowded market. Competitive pricing analysis offer sophisticated benchmarking capabilities, enabling businesses to position themselves strategically. By aligning prices with market expectations, businesses can gain a competitive edge and capture a larger share of the market.
Be Future-Ready with PriceIntelGuru
The forward-thinking businesses that integrate these solutions demonstrate an unwavering commitment to sustainability and growth. They're equipped to navigate the challenges of tomorrow's markets, secure in the knowledge that their pricing strategies are not just adaptive, but predictive. Take the leap into a data-driven future. Explore competitive pricing solutions today and unlock the full potential of your business. Contact us for a personalized consultation or Book a free demo now!