Competitor-based pricing: what is it and its benefits?

Posted on 19 April by Simon Gomez in Pricing strategies

When you sell products online, your goal is to sell many products and make a profit. But how do you do that, you may ask? One of the ways is to implement a pricing strategy. But a second question comes into your head. "Which pricing strategy should I pick?". Well, thankfully for you, we have a solution. It is called competitor-based pricing.     

The competitor-based pricing strategy is when a company establishes its prices based on the competition's prices. You can either price your products cheaper, more expensive, or the same as your competitors. For example, if you are in the chocolate industry and know that a competitor sells the same product as you at $5. You can either choose to sell your chocolates below that price ($3-$4), at the same price ($5), or above ($6 or more).      

When you sell products below your competitors, you become a low-cost leader in the market. Doing this attracts many customers who look for low prices. But before you decrease your products' prices, you must do some research and calculations. That way, you do not damage your profit margins.  

When you sell products at the same price as your competitors, you will need to think of a way to separate yourself from your competitors. One of the ways to do so is to create marketing and branding campaigns so that your brand has added value.   

When you sell products above the competition, you have to justify that increase or premium price. For example, making products with higher quality, offering additional benefits, or offering more features than your competitors. Now, let's look at the advantages of having a competitor-based pricing strategy for your company. 

1- Prices are dynamic 

A competitor-based pricing strategy focuses on the prices of your competitors. The competition is constantly changing their prices for different reasons. If you want to stay relevant and updated in your market sector, you have to do the same thing. But you must do it with a program because they are faster and more accurate than humans. PriceTweakers helps you with that because we are the quickest and most precise pricing software on the market. 

2- Simple to execute 

A competitor-based pricing strategy is easy to implement for you as a company and easy to understand for your customers. You have to analyze your competitors’ prices and find an average price. From there, you can decide whether to have lower, higher or the same prices as your competition. It is up to you and the strategy you want to implement. 

3- Can be combined with other pricing strategies 

The competitor-based pricing strategy ignores consumer demands and production costs. It only focuses on the prices of your competitors. For that reason, you can combine it with other pricing strategies that take the first two factors in mind.  

Your company can use a competitor-based pricing strategy plus another one, and you will be able to stay ahead of the competition and cover your costs. 


A competitor-based pricing strategy takes your company to the next level and brings many benefits to your company, like increasing your sales and much more. PriceTweakers is the perfect tool for your company because you can monitor your competitors automatically, saving you time. With our program, you can use a competitor-based pricing strategy, with 30 different pricing strategies that you can choose from to boost your sales and profits.      

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