How To Do A Competitive Pricing Analysis

Setting the right prices for your products or services is critical for business success. A key component of smart pricing is understanding what your competitors charge for similar offerings. Competitive pricing analysis allows you to benchmark your prices versus alternatives that customers have in the market. 

With the right approach and price tracking tools, it provides data-driven insights to set competitive yet profitable pricing. Competitive analysis lets you know if your pricing aligns with, undercuts or exceeds prevailing market rates.

It reveals competitor vulnerabilities you can exploit and indicates how much room you have to maneuver.  With e-commerce and the internet making pricing transparent, such analysis is essential today. Here is a systematic approach to conducting competitive pricing analysis:

Define your competitor set

When developing a pricing strategy for your business, one of the most important steps is analyzing your competitors. Taking the time to thoroughly research and understand the competitive landscape allows you to make data-driven pricing decisions. 

Analayze data

To conduct a competitive pricing analysis, follow these key steps:

Identify Your Market Competition

First, cast a wide net to determine all potential competitors across these categories:

Direct competitors - These are companies offering nearly identical products or services to you. For example, direct competitors would be other furniture retailers if you sell furniture. Direct competitors pose the biggest head-to-head pricing pressure.

Secondary competitors - These competitors have partial overlap or target the same customer segments as you, but don't directly compete across your entire offering. For a furniture store, secondary competitors could include big box retailers with furniture departments like Walmart or Target. 

Category competitors - These are players in adjacent or complementary product categories that could potentially compete with you. A furniture store may see category competition from interior design services or home decor retailers for share of spend.

Upstream suppliers - Your suppliers impact pricing power by determining your input costs. For a retailer, upstream suppliers would include wholesalers and manufacturers.

Downstream channels - These are the distribution channels that control your customer access. For a consumer product, downstream channels would include retailers, e-commerce platforms, or dealers.

Research competitors in depth 

Once you have a broad list of potential competitors, research each in depth to narrow it down. Gather data on:

Product offerings - What is their product selection? Where is there direct overlap or gaps versus your lineup?

Pricing - What pricing and discounting strategies do they utilize? How do their prices compare to yours currently?

Buyer personas - What customer segments do they target? Is there significant overlap with your ideal buyers? 

Market share - What is their estimated market share versus yours? Larger share indicates more influence.

Reputation - How are they perceived in the market? High reputation indicates pricing power.

Prioritize the key competitors

Competitor research

With thorough research completed, you can now determine the 3-5 competitors that should be your pricing strategy focus. These key competitors have significant impact on your pricing flexibility and decisions.

Characteristics to look for in picking pricing priority competitors:

- Significant product/service overlap with you

- Large market share and buyer base

- Reputation as a market price leader 

- Similar target customer profiles as you

Continually track and analyze your key competitors' pricing strategies and market moves. This competitive intelligence will empower you to make better pricing decisions while optimizing profitability. Adjust prices where needed to stay competitive, while still supporting your brand positioning. Competitor analysis is an indispensable component of mapping your pricing strategy.

Gather pricing data points   

A robust competitive pricing analysis requires extensive research into your key competitors’ pricing strategies and tactics. Utilizing price tracking tools and market intelligence, compile extensive competitor pricing data including:

Published list prices 

Gather the published list prices for all your competitors’ products, services, features and configurations. Document both individual SKUs and product lines. Check sources like:

- Competitor websites and catalogs 

- Online listings on marketplaces, directories and review sites

- Public marketing collateral and sales sheets 

Track pricing across all comparable offerings to understand general list price positioning.

Discounts and promotions

Compile details on discounts, promotions and special programs offered by competitors, such as:

- Quantity discounts or bulk pricing tiers 

- Loyalty rewards programs with pricing perks for repeat customers

- Coupons, vouchers or special codes with discounts

- Bundled offerings and package pricing if components are available separately

- Financing options that reduce effective pricing through payment plans

These help reveal where competitors aim to attract customers or boost purchases.

Geographic and customer pricing variations

Geographic and customer pricing variations

Note any geographic differences in competitor pricing such as:

- Higher/lower pricing for certain regions or locations

- Foreign market pricing in global markets

- Shipping/delivery costs by region

And document targeted customer segment pricing like:

- Volume discounts for high quantity business purchases

- Exclusive pricing for certain industries or buyer groups

- Membership or subscription plans with flat monthly rates

These provide additional context on pricing flexibility.

Promotional and sales pricing 

Track both regular and limited-time pricing such as:

- Seasonal sales calendar with peak/off-peak pricing

- Holiday deals, new product launches and special events

- Clearance or inventory reduction promotions

Along with final posted transaction prices from sales reports and customer interviews. This showcases real-world competitive pricing.

Employ both public listings and primary sales intel through surveys, interviews and focus groups to compile pricing details. Robust competitive pricing data enables informed strategy decisions.

Organize data for equal comparison

After comprehensively compiling competitor pricing data, thoughtful analysis is required to extract meaningful insights. Carefully process and organize the raw pricing information to enable fair side-by-side comparisons:

Normalize metrics

- Normalize all pricing into common metrics like per unit, per square foot, per hour etc. This enables apples-to-apples comparisons across products. 

- For bundles with multiple components, break down bundle pricing to calculate effective per-unit pricing for analysis.

Adjust for differences

- Index pricing over time periods to identify seasonal patterns, promotions and underlying trendlines. Remove timing anomalies. 

- Adjust for geographic pricing differences like costs of shipping, taxes, or region-specific fees. Make geographic comparisons equal.

- Factor bulk order or high volume discounts into per-unit prices for parity to standard unit pricing.

Visualize patterns  

- Plot pricing on charts over time, by region, by order size and other cuts to spot patterns. Scatter plots and spectral analysis bring visual clarity to pricing curves and outliers.

Visualization patterns

- Calculate simple statistics like mean, median and standard deviation to quantify pricing spreads. Highlight outliers with especially aggressive or passive pricing.

- Analyze pricing by specific product, customer segment, order size and other dimensions for insights on strategic variability.

The goal is to surface insights within the pricing details. Thoughtfully normalized, adjusted and visualized competitor pricing data reveals:

- General pricing position relative to competitors

- Products, regions or segments where pricing diverges most

- Time-based patterns like seasons, events and promotions  

- Reactionary pricing moves and leader-follower dynamics 

- Opportunities for differentiation through pricing strategy

Careful competitive pricing analysis provides the factual foundation for your strategic decisions. Derive insights that inform pricing optimization, alignment and communication.

Understand strategic context 

Study the strategic rationale behind competitor pricing:

- What are they optimizing for - profits, revenues, market share?

- Who is their target customer segment and how does pricing align?

- How does pricing support their brand positioning?

- What value beyond price do they deliver to justify pricing?

Context enables interpreting the numbers correctly and predicting future moves.

Identify pricing gaps and opportunities

With organized, adjusted data, you can spot competitive advantages, weaknesses and gaps:

- Does your pricing follow, lead or lag competitors?

- Which products and segments have the biggest gaps you can close or exploit?

- Who is the price leader? Are you the high/low cost provider?

- How do discounts and promotions compare relative to competitors? 

- How does your bundling strategy measure up?

Quantify specific opportunities to adjust pricing for greater appeal and competitiveness. 

Competitor analysis

Model optimal counter-strategies  

Based on insights uncovered, model alternate pricing scenarios:

- How will competitors likely react if you cut/raise prices by X%? 

- What is impact on demand if you undercut/exceed market pricing?

- What adjustments provide upside without sacrificing margins?

Stress test price change plans through scenario analysis. 

Track competitor pricing over time

Treat competitive pricing as a key performance metric to continuously monitor:

- Set up news alerts and Google Alerts to get notified of competitor price changes

- Follow competitors on social media for new product/pricing announcements

- Regularly check price listing pages for latest rates

- Speak with sales teams and customers for real-time intel  

- Update your analysis on a quarterly or monthly cadence

Real-time tracking prevents nasty surprises and keeps you calibrated.

Leverage technology for efficiency

data driven insights

Pricing analysis at scale requires technology enablement:

- Web scraping tools to digitally collect online competitor pricing 

- Data organization and visualization dashboards

- Statistical analytics and machine learning for pattern detection and forecasts

- Pricing optimization engines to rapidly respond to market shifts 

Technology allows continuous monitoring that is impossible manually.


In summary, rigorous competitor pricing analysis is indispensable for succeeding in the digital era. Implement a structured approach for collecting, organizing, and acting on market pricing intelligence. Keep the process dynamic with ongoing tracking and stress testing. With hard strategic insights, you can confidently develop pricing that delights customers, outpaces competition, and accelerates revenue.

About the Author Peter K.

Peter K. is an experienced digital marketer with a decade of expertise in driving business growth through innovative strategies. His data-driven approach and deep understanding of SEO, PPC, social media, and content marketing have propelled brands to new heights. With a client-centric mindset, Peter builds strong relationships and aligns strategies with business goals. A sought-after thought leader and speaker, his insights have helped professionals navigate the digital landscape. Trust Peter to elevate your brand and achieve success in the digital era.

Peter K.

April 4, 2024