The Best Ways Of Implementation Of Competition Based Pricing Strategy


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Choosing a pricing strategy, you will definitely see the advantages and disadvantages of the majority of them, which would give you enough ground to implement it in your business. Competition based pricing strategy became really popular nowadays, and people would like to find, out whether it is worthy to be used in their business, or not. 

Today, we are going to see the best pieces of advice to implement this strategy in your startup and see, why is it important to be used.

Competition Based Pricing: What Is It?

Simply, this is a way to manage the prices of your services depending on the prices your competitors made. This way, you are able to produce the demanded service providing a beneficial price. 

This way, the price can be lower, equal, or even higher, than your competitors have. There are three major strategies, but not that many people know how to implement them in their own startups or business models. 

How To Implement Major Competition Pricing Strategies In Your Business?

In fact, you have three ways of implementing these strategies. And they vary, depending on which kind of business you are. However, for the majority of projects, such a strategy would be similar. 

  • The strategy of lowering. When you are beginning a new business, the best way to attract customers and provide them with a good image of your brand is to give them common goods at lower prices. This strategy beneficially works for both local markets and innovative online services. For example, even if both companies sell only VPN services, that are equally good, for example, company “A” can provide it for only $8 per month, while the price at company “B” is $10. This way, company “A”, which is now on a market, would attract more customers.
  • Making prices higher. The strategy of providing a higher price might be risky. For this reason, you have to make your customer sure, that he will get the high-level products, which have much more beneficial features than competitors provide. This way, you are more likely to get customers, who want to get more qualitative goods or services. 
  • Making prices equal. Making all the prices equal, you are able to attract more customers, giving them more interesting features. There are two types of implementing this strategy. The first one is giving beneficial conditions for the customer. For example, both companies sell similar cups for only $5. However, company “A” gives some stickers with it or provides some personal discounts for further purchases. The second one gives an opportunity to provide the price a little lower. When company “B” sells a product for $100, company “A” would give it for only $99, which already sounds like a great deal. 

Is Competition Based Pricing Easy To Be Implemented?

The implementation of this strategy might not always be an easy solution. This way, some businesses would experience minor losses, while they try to get the most beneficial price, depending on their competitors. 

However, using competition based pricing, you will be able to create not only beneficial conditions for your targeted audience, but find the best way of getting income for yourself.