Skip to content

Competitor Based

Image showing a man tracking the prices through a laptop

What Is Competitor Based Pricing?

A competitor-based pricing strategy, also known as competitive pricing, is an approach where a company sets its prices based primarily on the prices set by its competitors. Instead of solely focusing on internal factors like production costs or desired profit margins, companies using this strategy closely monitor the prices of similar products or services offered by competitors in the market.

Here’s how it works:

  1. Monitoring Competitors: Companies actively monitor the pricing strategies of their competitors, collecting data on the prices of similar or substitute products or services.

  2. Setting Prices: Based on the information gathered, the company adjusts its own prices to either match, undercut, or slightly exceed competitors’ prices. This decision depends on various factors such as market positioning, brand image, and perceived value.

  3. Remaining Competitive: The goal of a competitor-based pricing strategy is to remain competitive in the market while still ensuring profitability. By aligning prices with competitors’, companies aim to attract customers who might compare prices before making a purchase decision.

  4. Adapting to Changes: Pricing decisions may need to be adjusted frequently to reflect changes in competitors’ pricing, market dynamics, or other external factors. This flexibility is crucial to maintaining competitiveness over time.

Competitor-based pricing strategies are common in industries where products or services are relatively homogeneous, and customers have easy access to information about prices from various sources. While this approach helps companies stay relevant in the market, it also requires careful monitoring of competitors and a keen understanding of customer perceptions and preferences.



Manually tracking thousands of prices & price changes on a regular basis is extremely time consuming. So we strongly advise price tracking or better yet, a price intelligence solution.



Using a price intelligence solution you can easily identify-

  • All price points of a given product including historical pricing data
  • Identify key products which you want to remain competitive on and also areas of improvement.
  • Price intelligence can also help with promo & range analysis.

The Advantages Of Competitor Based Pricing

  • Market Responsiveness: By closely monitoring competitors’ prices, companies can quickly respond to changes in the market, adapting their own prices accordingly to remain competitive.
  • Customer Perception: Aligning prices with competitors can create a perception of fairness among customers, potentially increasing trust and loyalty.
  • Ease of Implementation: Setting prices based on competitor pricing can be relatively straightforward, requiring less complex calculations compared to other pricing strategies.
  • Competitive Positioning: By pricing in line with or slightly below competitors, companies can position themselves as viable alternatives in the market, attracting price-sensitive customers.
  • Market Share: Competitor-based pricing can help companies gain or maintain market share by offering prices that are attractive compared to competitors, potentially capturing more customers.

The Disadvantages Of Competitor Based Pricing

  • Profit Margins: Relying solely on competitor prices may lead to lower profit margins if competitors engage in price wars or set prices below sustainable levels.
  • Loss of Differentiation: Pricing solely based on competitors’ prices may undermine efforts to differentiate products or services based on unique features or value propositions.
  • Vulnerability to Competitor Actions: Companies using competitor-based pricing may be vulnerable to sudden pricing changes by competitors, which can disrupt their own pricing strategies and profitability.
  • Limited Strategic Control: This approach may limit companies’ ability to implement strategic pricing decisions based on internal factors such as production costs, value-added services, or long-term business objectives.

How Price Intelligence Benefits Competitor Based Pricing

Price intelligence provides businesses with valuable insights into competitors’ pricing strategies, market dynamics, and consumer behavior, enabling them to implement a competitor-based pricing strategy effectively. By continuously monitoring competitors’ prices across multiple channels and markets, price intelligence helps businesses stay informed about their competitors’ pricing decisions in real-time. This allows businesses to adjust their own prices accordingly, ensuring competitiveness while maximizing profitability.


Additionally, price intelligence offers data analysis and insights that enable businesses to understand market trends, identify pricing opportunities, and optimize their pricing strategies to meet customer demands. Ultimately, by leveraging price intelligence, businesses can make informed pricing decisions, stay ahead of the competition, and achieve their pricing objectives in dynamic and competitive markets.

Check out our Price Intelligence Solution!

Click the button to the right to request an online demo where we can go over your price intelligence requirements and demonstrate how the solution can benefit you!