Competitive Math Pricing Methodology


This means using competitor pricing as a basis of setting and changing pricing according to market changes. Price decisions are done according to market pricing, and some might be higher or lower.


Offering the exact same price as your competitor puts the customer to an evaluation situation. Customer then compares your product with your competitors’ product, and probably chooses the one which gives more value for that price. This method keeps prices competitive but also leaves room for error when price premium might be available. Often used with ABC-analysis where A-group prices a priced more aggressively and C-category prices might be priced with higher premium.

You can also price your product below the price your competitor offers. This setting is interesting to the customer but creates risk to your business. That is why you need to be careful when pricing below competitor prices. Always evaluate the situation accordingly, because this method might bring in negative cash flow. The last thing you could do is price the product above what your competitors charge. There are two things you need to consider when implementing this method: customer probably expects more value of your product or service, since your product costs more than the one of your competitors. And you must make sure you can answer to these customer expectations, since if you don’t, you lose your customer to your competition.

Want to learn more about pricing?

Are you keen to learn more about pricing? Head to our Pricing Academy, from there you can find our latest articles about pricing and other free resources related to pricing, be sure to check them out!

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