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Why Pricing is Important for Businesses that Don’t Compete on Price

There is a big difference between competing on price and competing on value. As you may already understand price is one thing, but value can be numerous things to people, and many see it differently. Here’s why why pricing is important for businesses that don’t compete on price.

However, even if you don’t compete in terms of price, it’s important you know competitor pricing as it’s still a component in the value you offer.

Competitive Advantage

Simply, if you don’t have a plan to win, there’s no point joining the game. Having a competitive advantage in business doesn’t necessarily mean having the lowest prices. Generally speaking there are three different competitive advantages:

  • Quality
  • Price
  • Service


Even though on the outset it may seem like pricing is the only one where competitive intelligence is important, this is simply not the case.

Offering a better quality of product or a higher level of service requires more time, resources and cost. All of these require money. In turn, the extra quality or service you offer over that of your competitors still is reflected by the base price of the product you offer and in turn the price they offer it for.

For instance, say you offer notably better service than they do and so can charge a premium price for the same product, with a premium being added for the better quality of service. If you don’t have pricing intelligence it increases the chances of you coming in too low or too high and not making the up-most of your quality or service based competitive advantage.

Thus, even if you’re not competing directly on price directly, you’re still competing and your competitive advantage and the premium you make is a reflection of this.

Best Quality for Best Price

For many companies being able to offer the best quality product for the best price is important. Again, the best price isn’t necessarily the lowest price. The product may cost a little more, but the item is far better quality than lower priced items. Offering great quality at a fair price may result in consumers testing the water with lower priced alternatives, but in most cases will see them return to your business.

Pricing intelligence makes it easier for a business to understand where price and quality meet and that’s important for a business hoping to offer value. Even if your product costs more it still may be better value than the competitor’s product.


The level of consistency that you show in pricing also says a lot about your product. If you frequently alter prices to compete in a race to the bottom, it’s often tougher for consumers to calculate their true expenses. Additionally, it may result in splurges of orders and then slack periods . Additionally because of these spikes in orders, some businesses find delivering on these orders on time can be tough. In turn, your reputation may take a dent.

Being well stocked, offering consistent relatively competitive pricing for quality goods and giving customers the same outcome each time renders transparency and creates trust with customers – something that benefits a site for the long term.

In conclusion, depending on the sort of business you run, understanding pricing can be important for different reasons. It’s not just businesses in a race to offer the best price that need pricing intelligence, it’s any business that wishes to have a competitive advantage, offer better quality at a good price and achieve consistency that do.