How price competitive analysis is performed
When it comes to pricing, there are many things to consider. How much do you charge for your product? Are your prices fair? Is anyone else offering a better deal? Just how much value does your product deliver, and what price-sensitive potential customers will it appeal to? This is where a price-competitive analysis comes in. It’s essentially an analysis of the price and quality of your product compared with other products on the market. This can help you decide whether you need to change your pricing or take some other action. There are many ways to do a price-competitive analysis, but the most helpful methods usually break down all of the factors affecting your pricing. Here’s an overview of everything you need to know about this important process.
What Is a Price-Competitive Analysis?
A price-competitive analysis is a way of evaluating your product or service and your competitor’s offerings to determine how to price your product profitably. There are several different analyses you can use depending on your goals.
- Cost-based analysis – This analysis determines the price based on your costs and profit margin.
- Revenue-based analysis – This analysis determines the price based on your forecasted revenue.
- Value-based analysis – This analysis calculates the price based on the value you offer to customers.
- Customer-based analysis – This analysis estimates the price based on customer perceptions of value.
- SWOT analysis – This analysis determines the price based on your strengths, weaknesses, opportunities, and threats.
Why is a price-competitive analysis important?
A price-competitive analysis not only gives you a breakdown of your product’s pricing compared to your competition but also shows you exactly where you can improve. A good price-competitive analysis can help you make more money by charging the right price for your product. It can also help you avoid making a pricing mistake that could cost you a lot of money. Regularly reviewing your analysis can help you stay on top of pricing trends and customer needs, which can help you stay competitive and maximize your profit.
When putting together a price-competitive analysis, the first step is collecting data from your customers. You can do this through surveys, interviews, or online focus groups. You can also collect data from your own sales data and inventory records. This can help you determine your costs and profit margins. Keep in mind that depending on the analysis you’re doing, you may need to collect different customer data.
Once you’ve got your data, you can start comparing it to that of other companies. This is called benchmarking. A common type of benchmarking is price benchmarking. In this, you’re comparing your product to others in the same industry. Price benchmarking is helpful because it allows you to take a broader look at your enterprise. You can see what other companies in your industry charge for their products. You can also see the customer value they’re providing and what they’re doing to stand out. Price benchmarking also allows you to see where you can strengthen your product to make it more price competitive. You can see what your strongest competitors are doing to win customers.
Which customers should you survey?
When putting together your price-competitive analysis, the next thing to decide is which customers to survey. You want to target customers who are price sensitive and/or value-sensitive. This allows you to get a good picture of what customers are looking for in your product. These customers may still decide to buy your product anyway, even if they find out it’s a little more expensive. They may find your product’s benefits are worth the extra money. But price-sensitive customers are the ones who are willing to switch to a (potentially) cheaper product if you don’t offer something that’s worth what you’re charging.
How price competitive analysis is performed
In conclusion, a price-competitive analysis is a way of evaluating your product as well as your competitors’ offerings in order to determine how to price your product profitably. This analysis helps you see where to strengthen your product to make it more price competitive. When conducting a price-competitive analysis, the first step is collecting data from your customers. Once you’ve got this data, you can start comparing it to that of other companies. Price benchmarking is helpful because it allows you to take a broader look at your industry.
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