Competitive pricing analysis has several advantages, which can help you make decisions and position your product in a way that will appeal to customers. It is essential, however, to identify the challenges in gathering competitors' pricing indicators, such as structures, models, and policies, to avoid making errors that can result in inaccurate pricing strategies for your solution.
When formulating an effective pricing strategy for your product, you should simulate how buyers will respond to set your pricing as dynamic and flexible as possible. This process has to start with obtaining updated and high-quality analysis of the price of your rivals' products on the market. Other than implementing that assignment in illegal methods, here are a few additional examples of the mistakes you want to avoid.
Conducting a market-wide pricing comparison of your rivals can be time-consuming and challenging, and prices can change suddenly.
In many industries, the selling price of goods can fluctuate daily based on promotions and offers. Thus, comparing prices seldom leads to incorrect results.
Comparing Red Apples With Green Apples
Optimal pricing comparison requires comparing products or services with similar features. It is unlikely that your price match will be effective unless it also considers other aspects, such as features or the entire value proposition. Prices alone will not suffice.
Price planning should always be guided by long-term thinking, but too often, tactical decisions are substituted for pricing strategies.
Rather than taking a comprehensive approach to the competitive landscape, such as competitor pricing across their whole portfolio, pricing information is frequently used to adjust the prices of specific items regardless of the market. Pricing decisions may result in lower product value and weaker competitiveness.
Running B2B Mystery Shopping Yourself
Through secret shopping, you can obtain only one piece of information since each rival will supply you with only one piece of information. Also, never pretend to be a buyer to a rival, and don't portray yourself as one. While you can run deep-web searches for proposals or inquire with a potential or current customer, working with a competitive research organization that gathers detailed and challenging data is the best option.
Ignoring Price Elasticity
There is a high likelihood that your competitors use scalable pricing, where the cost depends on the value received. Scaling and success are crucial considerations when it comes to pricing. Client segmentation and reduced turnover are two pricing benefits that scale more closely with customer value.
Counting on Win/Loss Analysis
On the one hand, all prices are probably negotiable, so theoretically, even having their price book doesn't tell you much. On the other hand, if you count on each win/loss analysis to understand where the price settles after negotiations and contract signing, you end up with an anecdotes-based picture. A broader process is required here.