subject: Have You Worked Out How Your Competitor Pricing Should Be Helping You? [print this page] Its pretty easy to get annoyed at competitor pricing. You sit there and watch someone else sell the same product or service as you, at a significant discount, and you wonder how they do it.
Well unfortunately that is the free market economy in action. People are at liberty to sell what they own for whatever they want. Unless they do it in the presence of big business of course, in which case they will be squashed like a bug. But thats another story.
So for today the focus is on competitor pricing and how to beat it. And the key in that equation is how well you analyse it.
Being reactive to competitors prices is daft. They might be having an end of line sale. They might even be in financial trouble and dropping their prices massively to get some money back in, rather than having no money coming in.
So analysis is key. You need to get a handle on long term trends. You need the skill and ability to align your awareness of seasonality and current trends with the prices your competitors are maintaining.
For example, where one competitor pricing stream drops massively while everyone else stays on a par with you, you have to investigate, do some digging and thinking before you follow suit. Because if that price drop is indicative of something other than an attempt to grab the market share then you dont need to drop your own price in accord. In fact so doing may send out the wrong signals to your market.
While something is indeed only worth what someone else will pay for it, it is also true that the market controls the concept people have of what they are willing to pay. In other words where prices for a commodity are uniform across a number of vendors, people dont tend to trust a vendor selling the same thing for a significant discount unless there is a clear reason for them so to do. A closing down sale, an end of season sale, perhaps! But if your competitor pricing is all on a uniform level and you go much lower for no apparent reason, you run the risk that people wont buy from you because they think your goods are shoddy, inferior or fake.
Never underestimate the power of the market as a whole in holding competitor pricing in check. The real price variations you will be looking at when you do your research are likely to cluster around a basic mean, rather than spreading out with a median holding the graph in line.
So your competitor analysis should take the high and low end of the spectrum into account. Look at the highest and lowest examples of competitor pricing and then look at the wider picture to see why their prices are so different. Is there a trend coming that you and the rest of the gang have not yet foreseen?
Competitor analysis is the first step towards a better pricing structure.
by: Price Trakker
welcome to Insurances.net (https://www.insurances.net)
