Many retailers leverage the power of discounts to attract more customers and increase their sales. However, do it in moderation lest you end up making losses. For instance, you may want to give limited-time discounts as a way of experimenting to see what works best for your customers without affecting the company’s financial status.
Discounts are a great way of retaining customers and giving short term incentives is one way of taking a minimal risk. If you want to find out how much discount you can give your customers, try competitive pricing analysis with netRivals.
Unlike in other strategies where the pricing of products and services is determined by production overheads and costs, the competitive pricing strategy is a concept where product and service pricing depends on the competitors’ prices on similar products. Are you considering a competitive pricing strategy for your company? Here are some of the options you can consider.
- Low Prices. This means making your product and service provider services lower than what your competitors are offering.
- Matched Prices. You can choose to offer your products and services at a price similar to what your competitors are offering. However, you should find something that sets you apart from your competitors. In this case, you can opt to improve the quality of your products.
- High Price. Here, the price of your products and services is higher compared to what the competitors are offering. Identify essential things that are missing from the products and services that your competitors and incorporate them into your products.
How can Retailers Adopt Competitive Pricing?
As an entrepreneur, adopting the following strategies will help you price your products and services competitively.
Calculate your Costs
Before adopting a competitive pricing strategy, you need to evaluate your business operational costs. An easy way of easing this process would be through creating a list of your expenses and assets, and trying to identify ways in which you can reduce the operational costs for your business. For instance, cutting down production costs can help you lower your product prices.
Evaluate Your Competition
The next step involves evaluating your competitors or the retailers who are in the same industry. As we’ve seen above, understanding competitor’s prices is a critical way of helping you figure out how to price your products. Remember, product prices are likely to fluctuate over time.
Therefore, it’s important to evaluate them for some time to get a comprehensive analysis. While at it, establish whether or not your competitors offer discounts. If they do, be sure to find out when they choose to offer them and the reason behind it. This comprehensive data will come in handy to help you set up your product prices. At this point, you can choose any of the pricing options indicated above.
Let Your Prices be Below Market Value
While pricing your products below market value can help you attract more customers, you risk losing revenue and losing out on any profits. Sometimes you’ll even incur losses. Experts in the industry insist that retailers should identify their break-even point by comparing the fixed costs, variable costs, and potential product prices.
Whether you are just venturing in the world of business or are already established, analyzing your competition helps you determine the ideal prices for your products. Developing a competitive pricing strategy can be an arduous task and companies should strive to understand the industry and adopt the right procedures to achieve success. With a robust competitive pricing strategy, you can be sure of beating your competition, attracting more customers, and making profits for your business.