In an unstable business environment, data-driven decision making and some level of automation is a great combination that’ll give your company greater control and agility.<\/p>\n
Competitive pricing is one strategy built upon data collection, analysis, and pricing automation. Following this step-by-step guide, you’ll learn:<\/p>\n
- \n
- What is competitive pricing<\/li>\n
- How you can use pricing to achieve different objectives<\/li>\n
- How to track competitor prices<\/li>\n
- How to use competitor pricing information<\/li>\n
- How to use historical data for long-term planning<\/li>\n<\/ul>\n
Learning all will help you get a competitive advantage, increase sales, and, most importantly, align pricing with your marketing strategy<\/a>.<\/p>\n
What is competitive pricing?<\/h2>\n
Competitive pricing is a strategy where you make pricing decisions based on competitor prices. Foremost, it gives you total control over your price positioning. <\/p>\n
Using this strategy, you can match or beat competitor prices without bleeding money, or increase prices without losing your competitive edge.<\/p>\n
So, in other words, it gives you the flexibility and agility you need in pricing decisions.<\/p>\n
We’re all getting used to this new, uncertain environment. In uncertainty, you need to be flexible. Costs are increasing, and demand fluctuations make it harder to manage inventory.<\/p>\n
On top of that, a whole new set of online competitors entered the market. Both consumer and competitor behavior<\/a> is very unpredictable, given that we all have very limited foresight.<\/p>\n
Competitive pricing gives you the ability to react to changes in market conditions. Let’s better understand with an example.<\/p>\n
Some businesses that experience a decline or defer in demand resort to deep price cuts to eliminate the dead stock. <\/p>\n
But it’s highly doubtful that deep discounting increases profitability \u2014 because it may have a minor effect on demand in the long run, but surely you’ll diminish profit margins. <\/p>\n
So what are you supposed to do to clean inventory?<\/p>\n
Using competitive pricing to clean inventory<\/h3>\n
First, you need to track competitor prices so you can see where your prices stand. <\/p>\n
Why?<\/p>\n
If you want to get rid of your inventory quickly, you must offer below-average prices \u2014 cheapest if you can. <\/p>\n
Unless there’s a good deal on the table, why would shoppers choose your store?<\/p>\n
87% of participants in a global Google study<\/a> said knowing they get a good deal is important when choosing a retailer or brand.<\/p>\n
This number is even higher today, with more people cutting spending and feeling the need to find the cheapest deal, especially for repeat purchases.<\/p>\n
So, if you want to entice shoppers to buy from you \u2014 in high volumes, preferably \u2014 make sure you have a competitive offering. We can’t emphasize enough that deep discounting won’t help you in the long run. <\/p>\n
It crashes profit margins, may start a price war, and will definitely destroy value. <\/p>\n
Getting traction to your website with popular products<\/h3>\n
In another scenario, you can use competitive pricing to drive traffic to your website. <\/p>\n
Comparison shopping engines (CSEs) are substantial sources of traffic for e-commerce websites.<\/p>\n
\nSource<\/a> <\/em><\/figcaption><\/figure>\n<\/div>\n For example, this store sells this very popular product at a good price \u2014 just below its cheapest competitor, to be precise. And CSEs are high-traffic websites that many shoppers visit every day. <\/p>\n
By appearing at the top of this search, this store increases visibility and traffic without spending time or money.<\/p>\n
Retail giants take it a step further and sell popular products below-cost to incentivize shoppers to come to their store and hopefully make further purchases that’ll cover the loss. It’s called loss leader pricing.<\/p>\n
A popular loss leader example is printers. Most people look for the lowest price when it comes to big purchases. But they don’t pay the same attention to smaller purchases. That’s why retailers can charge higher prices for the ink and make up for the loss, helping them acquire new customers with very little effort.<\/p>\n
Knowing where you stand against competitors, you’ll be able to use pricing for various purposes. <\/p>\n
One product will help you get shoppers through the door. Another will be a key profit source.<\/p>\n
It’s wild how quickly shoppers catch on when prices change, too. Take Black Friday or Prime Day, for example\u2014those are practically national holidays for deal hunters. If you experiment with pricing just a bit on a product that\u2019s popular in niche forums or social media threads, news travels fast. Suddenly, you’ve got a rush of new eyes on your business, even if a chunk are just window-shopping for deals. In 2025, word-of-mouth isn\u2019t just old-school fitness\u2014it\u2019s viral TikToks and Reddit threads lighting up with pricing screenshots within an hour.<\/p>\n
Of course, with that exposure, there\u2019s always a risk some shoppers simply cherry-pick the doorbusters and bounce. But sometimes a quick spike in interest introduces your brand to folks who\u2019ll come back for more, even when you\u2019re not the cheapest. It\u2019s not a perfect formula. Tracking post-promo sales and keeping an eye on bounce rates gives you the real story\u2014no need to guess whether those rock-bottom offers paid off down the line.<\/p>\n
It’s tempting to see competitive pricing just as a numbers game, but there’s also a bit of psychology at play. When customers spot that one irresistible deal on your website, it can change their whole perception of your brand\u2014even if your other products aren’t always the cheapest. It’s a bit of a balancing act: you can’t win every comparison, nor should you. Sometimes just being in the conversation is enough to pull people in.<\/p>\n
And honestly, CSEs do more than just funnel price-conscious buyers. They become a kind of showcase for how agile and responsive you are as a retailer. Savvy shoppers (and they really are everywhere in 2025) notice when a store’s consistently in the mix with up-to-date prices and relevant stock. It becomes part of your reputation, for better or worse. So, even if you lose a few battles, showing up prepared is still a small victory, reputation-wise.<\/p>\n
So how do you use a competitive pricing strategy?<\/p>\n
How to price a product with competitive pricing<\/h2>\n
Step 1: Track competitors<\/h3>\n
If you don’t know who your competitors are, start by identifying them.<\/p>\n
A simple Google search will be quite helpful. Since the competition is online, finding them is like a piece of cake. <\/p>\n
To make sure you’re not missing anyone out, you can use a keyword research tool like SEMrush<\/a> or SpyFu<\/a> to see who else is competing for the same keywords.<\/p>\n
The next step is to collect pricing data. Note that it’s a continuous process, not a one-time task.<\/p>\n
A great majority of e-commerce stores have more than several competitors. Even if you have only 50 products to track on ten different stores, it’ll take over 6 hours to collect and record the data on a sheet.<\/p>\n
Unfortunately, that amount of time is more than enough for the data to become obsolete. For instance, Amazon changes the product’s price every ten minutes on average<\/a>. <\/p>\n
In reality, online prices change far more frequently than you can manually keep track of.<\/p>\n
You can automate the process by having a professional team of developers or a web scraping service provider build an in-house pricing engine for about $244 for the initial setup<\/a>. <\/p>\n
Keep in mind that software will require maintenance, which costs another $120\/month on average.<\/p>\n
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