oboloo FAQ's

How do businesses use Competition-Based Pricing to stay competitive in the market?

How do businesses use Competition-Based Pricing to stay competitive in the market?

Competition-based pricing is a crucial competitive strategy used by businesses to stay competitive in the market. The strategy involves analyzing the prices of similar products offered by competitors and setting their own prices accordingly. When done correctly, competition-based pricing can help businesses gain an edge over their competitors, increase sales, and make more profit. But how do businesses use competition-based pricing to stay competitive in the market? In this blog post, we’ll explore the various ways that businesses can use competition-based pricing to remain competitive in today’s market.

What is Competition-Based Pricing?

Competition-based pricing is a strategic pricing approach used by businesses to remain competitive in the market. This approach takes into account the prices of similar products or services offered by competitors and aims to price products or services similarly. The goal of competition-based pricing is to match or beat the prices of competitors while still making a profit.

There are several benefits of competition-based pricing for businesses. This approach can help businesses better understand their competitor’s strategies and objectives. In addition, this approach can also help businesses assess their own strengths and weaknesses in relation to their competitors. Furthermore, competition-based pricing can help businesses determine the most effective way to price their products or services in order to stay competitive and attract customers.

However, there are also some challenges associated with competition-based pricing. This approach can be difficult to implement if there is not enough data available on competitor prices. In addition, this approach may not be effective in all markets or for all products or services. Finally, competition-based pricing can put pressure on businesses to lower their prices, which may lead to decreased profits.

How does it work?

In order to understand how businesses use Competition-Based Pricing, it is first important to understand what Competition-Based Pricing is. Competition-Based Pricing is a pricing strategy in which a company sets its prices based on the prices of its competitors. This pricing strategy is often used in industries where there are a small number of competitors and each company has a good understanding of the others’ pricing strategies.

There are several reasons why businesses may choose to use Competition-Based Prices. The most common reason is to stay competitive in the market. By setting prices based on the competition, companies can ensure that they are not priced too high or too low in comparison to their competitors. This pricing strategy can also help companies better understand their competitors’ pricing strategies and how they may change in the future.

Competition-Based Pricing can be a very effective pricing strategy for businesses, but it is important to remember that it is not always the best option. In some cases, it may be more beneficial for a company to price its products based on its own costs or value rather than on the competition. It is also important to consider the potential effects of this pricing strategy on customer loyalty and brand equity.

Pros and Cons of Competition-Based Pricing

There are both advantages and disadvantages to using competition-based pricing as a business strategy. On the plus side, this approach can help keep prices down for consumers and encourage companies to be innovative in their product offerings. Additionally, it can create a more level playing field for small businesses to compete against larger ones. However, there are also some potential drawbacks to this type of pricing strategy. For example, it can sometimes lead to a race to the bottom in terms of prices, and companies may be less likely to invest in research and development if they feel that their profits will be undercut by competitors. Ultimately, whether or not competition-based pricing is a good fit for a particular business depends on that company’s specific circumstances and goals.

What are some common strategies used in Competition-Based Pricing?

There are a few different ways that businesses can go about using competition-based pricing in order to stay ahead of their competitors. The most common methods are as follows:

1) Undercutting the competition – This involves setting your prices slightly lower than your competitors in order to entice customers to purchase from you instead. This strategy can be risky, as it can lead to a price war and margin squeeze if not done carefully.

2) Offering discounts – Everyone loves a good deal, so offering discounts on your products or services can be a great way to lure customers away from the competition. Just make sure that you don’t discount too deeply, as this can eat into your profits.

3) Creating unique selling points – If you can find a way to make your product or service stand out from the crowd, then customers will be more likely to choose you over the competition. This could involve anything from offering a unique feature to having better customer service.

How can businesses make sure they are using Competition-Based Pricing effectively?

Competition-based pricing is a common pricing strategy businesses use to stay competitive in the market. In order to ensure businesses are using this strategy effectively, there are a few key things to keep in mind.

First, businesses need to understand their own costs in order to price their products or services accurately. They also need to be aware of their competitor’s prices and what other value they offer in the market. Additionally, it is important for businesses to know their target audience and what price point will be most appealing to them.

When used correctly, competition-based pricing can help businesses maintain a competitive edge in the market. By understanding their own costs and being aware of their competitor’s prices, businesses can price their products or services accordingly and attract customers.


In conclusion, competition-based pricing is a powerful tool businesses can use to maintain their competitive edge in the market. It allows them to set prices that are attractive to customers while still achieving their desired profit margins. By understanding how competitors price their products and services, businesses can gain insights into what pricing strategies they need to apply in order to remain competitive and successful. With competition-based pricing strategies, businesses can have a better chance of winning over new customers and increasing sales revenue.

Want to find out more about procurement?

Access more blogs, articles and FAQ's relating to procurement

Oboloo transparent

The smarter way to have full visibility & control of your suppliers


Feel free to contact us here. Our support team will get back to you as soon as possible

Oboloo transparent

The smarter way to have full visibility & control of your suppliers


Feel free to contact us here. Our support team will get back to you as soon as possible

© 2024 oboloo Limited. All rights reserved. Republication or redistribution of oboloo content, including by framing or similar means, is prohibited without the prior written consent of oboloo Limited. oboloo, Be Supplier Smart and the oboloo logo are registered trademarks of oboloo Limited and its affiliated companies. Trademark numbers: UK00003466421 & UK00003575938 Company Number 12420854. ICO Reference Number: ZA764971