Competitor Price Analysis for your online retail success

Competitor Price Analysis for your online retail success

Written by Alison Lurie, In Marketing, Published On
July 25, 2023

Establishing the right price for a product can be a challenge for most businesses. Pricing decisions require careful consideration to maintain competitiveness and achieve desired profit margins.

However, being too pricy can dissuade customers, and pricing too low can hinder profitability. One effective technique utilized by businesses to combat this issue is competitive pricing. This strategy not only sets a baseline for pricing but also helps to distinguish a company from its competitors and safeguard its market share.

For online retail businesses, setting themselves apart from other similar companies is crucial. Competing in this market requires extensive research and analysis in the field of competitive pricing. Our comprehensive guide offers valuable insights on how to conduct thorough research and come out on top against competitors. And by using our competitor price monitoring software you can simplify your pricing process and try out all the benefits of the automated competitor price analysis.

What is a Competitor Price Analysis?

There are many factors, both internal and external, that can affect the price, says So competitor price analysis is a research of an external factor, such as competition.

A competitor price analysis involves examining the market to determine how much other companies are charging for similar products. This approach is widely adopted in industries with high sales rates, such as retail. A competitive pricing strategy is critical to any business’s pricing strategy as it plays a significant role in product marketing and sales growth.

Competitive pricing analysis offers numerous advantages, including shielding from lost profits, expanding market share, monitoring market position, leveraging competitors’ weaknesses, and improving pricing strategy.

Keeping a close eye on the pricing structure can help a business identify potential areas of improvement and make adequate changes to stay competitive. In this manner, firms can reduce the possibility of losing clients to their competitors while achieving their revenue and profit objectives.

Advantages of Competitive Price Analysis

The advantages of competitive pricing analysis are plentiful, and every pricing policy should make use of it.

  1. Avoiding lost profits – knowing your competitors’ prices is crucial to position your product in the market and avoiding pricing it too low, which can lead to lost revenue.
  2. Growing your market share, which is an important factor for successful retail business according to Western Libraries – examining competitive pricing across all your products or services can reveal areas for growth. For instance, retailers may use “loss leaders” to enhance sales.
  3. Tracking your market position – keeping up with competitors is critical to maintaining your competitive pricing position over time.
  4. Take advantage of competitors’ pricing – by evaluating the pricing strategies, you can find a pricing sweet spot to leverage for your benefit. Comparing your products and services with your competition can highlight unique features to justify higher prices.
  5. Enhancing your pricing position – regular competitive pricing analysis can prevent a loss of customers to your competitors, while reaching revenue and profit objectives. Ignoring this can result in your business being seen as a “budget option” compared to competitors.

How to conduct a competitive pricing analysis

To conduct a successful competitive pricing analysis, begin by identifying both your direct and indirect competitors and evaluating how they price products in direct competition with you.

It’s important to consider indirect competitors as well, such as specialized stores or online marketplaces, that may also compete with your products. Examining their value propositions will help you understand if you’re competing on price alone or if other factors are impacting pricing decisions. Analyzing their marketing strategies and sales brochures can offer valuable insight into their pricing choices.

Next, narrow down comparable products by their value propositions, and track their pricing strategies over time, including seasonal variations, promotions, and past data. This information can help you establish a long-term pricing strategy that promotes competitiveness and maintains or expands your market share.

How to implement a competitive price analysis

Once you have concluded your extensive pricing analysis, it is advisable to adopt a competitive pricing strategy to distinguish your business from the competitors. There are some alternatives to consider:

  1. Position your product as a luxury item by setting a higher price point than that of the market. Although this might appeal to customers seeking exclusivity and top-notch quality, it could hinder your chances of competing with the affordability-seeking customers. That’s why keeping up with your rivals’ pricing strategies is a key factor.
  2. Consider price matching with your competitors if you offer services/products equivalent in terms of value. This approach could be worthwhile if you hold a substantial market share and offer competitive value propositions.
  3. Offer a lower price than the current market rate, which highlights your differentiation factor in providing cost-effective solutions. While this approach can help attract potential customers, it runs the risk of making consumers perceive your product as being of lesser quality. However, setting some products’ prices as loss leaders can be a great way to attract customers and make up for profits in other parts of your product portfolio. Constant monitoring of market fluctuations is crucial for earnings and competitiveness.


In today’s competitive e-commerce landscape, online retailers must analyze their rivals’ pricing structures to stay ahead of their competition. Competitive price analysis is a vital technique that online merchants can leverage to gain a foothold in the industry. By performing such analyses, retailers can attract new customers while retaining their existing ones, setting them apart from other stores.

Additionally, frequently tracking their competitors’ prices empowers retailers to notice trends and establish a well-informed plan for determining pricing strategies and managing inventory. This approach can result in improved profitability and unearthing new paths for expansion, facilitating sustained growth. This approach can help them enhance their profitability and uncover new opportunities for expansion, promoting sustainable growth.

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