Competitor analysis and pricing: a guide to effectively monitor your competitors

Who are your main competitors and how can you identify them? What relevant information do you need to collect about them that can determine your pricing and help you develop unique offers? How can you take advantage of the data you gather? Last but not least, how does PriceKit's pricing support system make this whole process easier? Let's see the details!

IDENTIFYING YOUR COMPETITORS

A very simple division can be made into two basic types of competitors.

Direct competitor: businesses that offer the same or very similar products and/or services to you. Customers usually choose directly between you and them. Analyzing and understanding direct competitors should be a high priority for you.

Indirect competitors: companies that sell in a similar subject area or search area as you do, but offer different products. For example: if you sell wine, a site offering craft beers would be considered your indirect competitor.

How do you find them?

For one thing, Google (Google Trends) can help you. Do keyword research, use keywords relevant to your products or services, then list the ones that come up most often in the results. On the other hand, there are a number of useful software tools you can use to map your competitors, including the extremely easy-to-use Similarweb, the powerful Ahrefs, or the truly versatile Semrush.

However, it is also a useful way to "investigate" your competitors by reviewing their company balance sheets and results in their public reports.

Price comparison sites and marketplaces are also very useful sources of information.

PRODUCT TESTING

When reviewing your product range, it is important to look at your competitors' products and portfolios in relation to your own.

• Are you selling the same or different products or brands within the same category?

• Are they of higher quality?

• Do they have extra features?

• Do they have a longer lifespan and more uses?

Although it's very easy to fall into this trap, don't be biased against your own products; try to look at this as honestly and impartially as possible.

• Product availability

• How common is selling from stock or out of stock?

• What channels are available: own site, price comparators, Google Shopping, etc.?

• How quickly do you make your products available, are there special conditions, and are delivery costs available?

PRICING, PRICING STRATEGY

The key is to discover how your prices relate to each other. Of course, it is also crucial to be aware of both the lowest and highest prices on the market, as well as the weighted average price.

And ask these simple questions about your competitors' pricing:

• Are they aggressively advertising low prices?

• Do they change their prices frequently?

• Do they constantly, rarely, or never promote?

• Are their prices misleading?

• Do they change prices consistently or ad hoc?

Then you need to compare the results of your research with your business plan, and your financial decisions, to get a better idea of what price strategy you can effectively pursue, and what your room for maneuver is. You can use the data to rethink your short and long-term business moves and adjust them if necessary.

Keep in mind: people don't always choose the cheapest option, so promising below your competitors' prices may not be the most effective option.

Don't forget, PriceKit's pricing support software can help you tremendously in monitoring your competitors' prices, monitoring up-to-date prices and stock levels of your competitors, and then suggesting optimal prices based on this. The fast-changing market means that you should in principle keep an eye on your competitors' price changes, but you can use PriceKit to alert you only to significant changes!