The Top Benefits of A Competitive Pricing Strategy

As an entrepreneur, there are many challenges to running a successful business. One of the biggest hurdles? Developing a competitive pricing strategy.

Finding the right pricing strategy for your business isn’t easy, but it can be especially difficult if you’re unsure what your local competitors are charging for the same services. The last thing you want is to leave money on the table – and that’s where a competitive pricing strategy can assist!

At Rare Strategies, we understand that it takes a lot of hard work and solid information to develop a competitive pricing strategy. That’s why today, we’re answering two tough questions – what is a competitive pricing strategy, and how does it positively impact your business?

What is a Competitive Pricing Strategy? 

A competitive pricing strategy is when a business selects strategic price points to better position a product or service based on local competitors’ prices. Typically, this happens when a product or service has been on the market for an extended period, and there are many different avenues of accessing this product.

Competitive pricing is performed by businesses that sell similar products to better understand their competitors and develop a pricing strategy that fits their business. However, no one strategy fits all. As a business owner, based on your findings amongst competitors, you can choose from one of the following pricing strategies:

• Higher Price Point
  • A higher price point, as the name suggests, means you are choosing to charge above your competitors. However, offering a higher price point typically means that your business offers a premium service or set of features that justify the higher price point.
  • To do this effectively and achieve the annual revenue you want, communicate these premium features to your customers. Otherwise, they’re going to turn towards competitors because they think you’re offering the exact same service rather than a premium service that justifies the higher cost. Ultimately, you’re going to attract consumers that care more about quality rather than cost.
    
    
• Lower Price Point
  • A lower price strategy is when you’re offering products or services at a lower price point than your competitors. Typically, this is successful when businesses can produce inventory at a high volume, or have a good understanding of whether or not it will negatively impact their profit margin. A low price strategy can be risky if you continuously take losses on the product. 
  • However, the appeal of a low price point is designed to attract more customers, and in many instances, this approach pays off. Also, if you can increase volume without impacting the cost of production, a low pricing strategy can yield highly rewarding results.
    
    
• Matched Price Point
  • A matched pricing strategy is when you match the exact price of your competitors because you have very similar products. However, just like with a high pricing strategy, the key is to differentiate yourself from competitors. Explain why your goods or services are better than theirs. In this case, the product itself is what matters the most. If you can prove what you’re offering is better than your competitors, then a matched price point will generate the income you want and even out the playing field.

Each of these pricing strategies can lead to varying sales and profit margins so the question remains – which one is best for your business? That’s where Rare Strategies can assist. Our team will gather the appropriate data, analyze your current pricing against competitors, and test various price points until we find the right strategy. Once we’ve pinpointed what’s most successful for your business, there’s no telling what could come next. As a company, we view our services as more than business consulting – we help our clients achieve their goals through a well-developed strategy and are here to help you every step of the way.

Top Benefits of A Competitive Pricing Strategy 

Now that we’ve discussed a pricing strategy, it’s time to discuss the benefits of a competitive pricing strategy and why it’s essential to your business’s success. 

• Greater Success
  • The right pricing strategy does more than level out the competition. It helps your business grow! Once you better understand your industry, your competitors, and the differences between your products and services, you’ll know how to position yourself in the long term.
  • You’ll finally be able to achieve or surpass your annual revenue goals if you haven’t before. Chances are, previously, you were underselling yourself or not utilizing your prices as you should have! With a competitive pricing strategy, you can finally see all your hard work pay off.
    
    
• Increased Profits and Preventing Net Loss
  • While it’s great to run a successful business, that success stems from your increased profit margins and maximizing ROI. Even if your prices are the same as competitors, focusing on how to improve your profit margins and increase demand for your services means a greater chance of success for your business.
  • By having a competitive edge on your prices, you avoid losing customers to local competitors. A competitive pricing strategy gives you time to evaluate your competitor’s products’ value and determine how to angle your own better, and avoid net loss.
    
    
• Understand Your Business’s Value
  • Conducting a pricing analysis on your competitors doesn’t just help you understand their products and services – you also have a better understanding of your own. Realizing what differentiates your business from the local competition means you can determine where to improve your products and services or how to angle yourself against competitors. Sometimes, it’s truly rewarding to see how you’re adding value to your customers’ lives with a good or service – validating all the hard work you’ve been doing as an entrepreneur.
    
    

Explore Rare Strategies Pricing Analytic Services

When it comes to running a successful business, there are many moving parts to consider. However, sometimes it’s overwhelming, especially when you’re unsure what’s causing roadblocks on your path to success. At Rare Strategies, we realize that it’s challenging to achieve your goals alone. That’s why we offer a wide range of business consulting services in Winston-Salem, Greensboro, Charlotte, Raleigh, and beyond. When you partner with Rare, we make it our business to know yours from the inside out and help you implement real change.

Part of our services include pricing analytics to familiarize ourselves with your current strategy alongside your local competitors. From there, we can analyze the data and develop an effective plan of action that generates the revenue you’ve been looking for. However, analyzing a competitor’s pricing strategy barely scratches the surface of what’s possible with Rare Strategies. 

Why Choose Rare Strategies?

At Rare, we help business owners increase their annual profits and help them unlock their true potential. While our competitor pricing strategy services help us take a closer look at your business, we offer a wide range of services that can help take your business to the next level. Our business consulting services include:

• Strategic Business Review 
• Revenue Accelerator Services
• Financial Forecasting Services
• Scenario Planning Consulting 
• Competitor Analysis
• Product Review Services
• Pricing Analytics for Product & Services
• Relationship Profitability
• Risk Management Consultant Service

From scenario planning to analyzing competitor pricing strategies, we’re passionate about helping your business.

If you want to learn more about our business, explore who we are or review our Frequently Asked Questions to see how we can better serve you!