Competitor-Based Pricing

Competitor-based pricing is a pricing method that utilizes competitor prices as a benchmark, rather than setting a price based on company costs or customer value.

Competitor-Based Pricing Examples

    Your competitor sells a product for $100, you sell it for $100
    A group of competitors sells a similar product to yours, you average the sales price and make that your sales price

Deeper Insights

In many cases, this method of pricing is not entirely effective because the company does not know what strategies their competitors are utilizing to select their price. In this case, using each other as a benchmark is like throwing a dart in the dark. Competitor-based pricing is not something that has no need in a pricing strategy, but it should not be your only way of finding an optimal price. Finding an optimal price includes taking competitor prices, cost of goods, market value, customer value, and more into account.

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Related Keywords: Cost-Plus Pricing, Geographical Pricing, Pricing Strategy, Value-Based Pricing