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Use competitor prices as a benchmark to develop a successful pricing strategy.
Generate a list of direct competitors that offer alternatives to your solution for the same target markets.
- Analyze search results, paid and organic, for key search terms related to your solution.
- Use analyst reports, such as the Gartner Magic Quadrant.
- Look at event sponsor lists.
- Survey and interviewing your sales team.
- Conduct a win/loss analysis with your CRM data and internal teams or engaging an outside vendor.
- Read reviews on sites such as G2 Crowd and Trustpilot.
- In the case of software, use tools like BuiltWith or Pipecandy, for ecommerce specifically.
- Send surveys to prospects, current and former customers, or paid recipients or market panels.
- Read industry publications.
Be sure to consider both upmarket and downmarket competitors. Customers do not always perceive the same quality differences you may know exist between offerings, and companies often use very similar messaging to their competitors.
Include information such as:
- Years in business.
- Annual revenue and percentage of revenue from online sales.
- Number of employees.
- Outside funding.
- Messaging on their home and interior pages.
- Paid advertising presence, messaging, and channels.
- Search engine marketing (SEM).
- Events they sponsor.
- Shipping methods.
- Content marketing.
- Email newsletter and frequency and nature of communications.
- Key capabilities and maturity, Harvey Balls are useful for visualizing this information.
- Number of customers and customers used in case studies and testimonials.
- Sales process.
Develop a list of indirect competitors, including inertia, that potential customers may see as a viable alternative to your solution.
When researching competitor prices, consider competition as any company or process that provides your customers with an option that meets the same need as your product.
This includes the option to do nothing or continue using inefficient work arounds. Quantify the cost in both dollars and time of these options.
For example, if you are selling an applicant tracking system that helps employers post jobs and track candidates from application through interviewing and final decision, an indirect competitor could be a process done through spreadsheets. Quantifying the resources and time involved, as well as risk and inefficiencies in doing it this way, will help you understand the value your solution provides.
Similarly, an e-bike is a substitute for a car for some consumers, and it comes with a very different price point. Understanding their value proposition and what part of it resonates with your target audience will enhance your pricing strategy.
Evaluate options for tracking competitor prices using online tools, ranging from web scraping tools to market and competitive intelligence platforms.
If your budget allows, using competitor pricing tools to monitor both specific competitors’ websites, online stores, and online marketplaces where their products may be sold can save you time and keep your competitive data current. A range of options exists to gather, store, and update this data, including:
- Market and competitive intelligence platforms, such as Klue.
- Price monitoring software, such as Prisync.
- Web scraping tools, such as Mozenda.
Target a prioritized subset of your direct competitor list to do a manual competitive pricing deep dive.
Identify key direct competitors and study their customer acquisition process, packaging, and pricing by visiting their website, reading their collateral, and, when applicable, viewing their published pricing and signing up for a trial.
If they sell physical goods in a retail store, visit and note how the products are positioned in the store, as well as the packaging and pricing. Potential competitors to prioritize might be:
- Those you know you frequently lose to from sales conversations or surveys.
- Aspirational companies whose products and services you admire.
- New players who are getting coverage or investments.
- Low-cost providers making claims similar to yours.
Read review sites, forums, and comments on social media to get insights on actual prices paid and the customer experience.
Sites such as G2 Crowd and Trustpilot may contain firsthand testimonials about price or relative price. Quora often includes candid feedback about pricing and competitive comparisons. Comments in social media can highlight consumer sentiment around pricing, as well as any fulfillment issues.
If you’re in an industry where pricing is often customized or unavailable publicly, you may need to contact your competitors directly:
- Call and ask for a quote.
- Have a friend inquire about the pricing.
- Request a product brochure.
- Fill out a demo request form, and complete a demo.
Monitor your competitors’ online activity for sales and coupons by signing up for email newsletters on their website and following them on social media.
Repeat the above process quarterly, and update your spreadsheet or database to keep a record of competitor messaging, offering, and pricing changes over time.
Keep this information in a centralized location, such as a knowledge base or shared drive. Communicate updates and trends regularly with stakeholders, such as sales, product, and marketing teams.