We use cookies to improve your browsing experience. By using this site you agree to our use of cookies. Dismiss

Price Index: A cherry on top of a competitor monitoring tool

by Manjari Balu on 3 mar 2023 (4-minute read)

Identifying your competitors is not a one-time process. As your business evolves and you find your niche, so will your competitors. So, basing your competitors based on your initial analysis, business size, and revenue is not enough.


• Price Index is the ratio of your product’s price in comparison to your competitors.

• It allows you to identify your true competitors, understands the impact of competitor prices and sales on your business.

• It also helps you optimise your pricing and avoid price wars.

• When combined with competitors’ price and promotion details, the data help you price your products strategically in response to industry trends.

Pricechecker price index will help you ensure that you are competing with the right people for each product and product segment in your business.

What is the price index?

Simply put, Price Index for a product is the ratio of the price of your product versus the price of your competitor’s product.

Similarly, Price Index for a product segment is the sum of the prices of the products in that segment vs the sum of a competitor’s in the same segment.

Calculating this manually for a growing retail business can be tedious with high margins of error. Pricechecker calculates the Price Index of both product and product segment wise and gives you data on the basis of product, product segment, and brand. PC does this both accurately and dynamically so every time you check, you see the Price Index for that moment and also present the data visually for any period of time that you choose.

How does it help retailers?

Price index helps you identify your true competitors and understand the impact of your competitors’ prices and sales on your business so you can avoid price wars by modifying your pricing strategy accordingly.

For instance, if the price index for a product or product segment is extremely low, it means that your prices are significantly higher than your competitors. This could mean,

• Your competitors have extremely low margins or they are compromising on it, or

• Your competitor is compromising on quality or value addition to be able to sell the product for that low a price

In both cases, they are not your true competitors because you will have to compromise on your margins or value to be able to sell at that low price. BUT, if neither of these is the case, then you will have to relook at your pricing strategy to adjust.

Similarly, if your price index is extremely high, then it means your competitors are selling at a much higher price than you are. This could again mean,

• They are targeting a different segment of consumers, in which case this could be a potential opportunity but not the right competitor, or

• They are adding value that is helping them sell at a higher price without losing customers, in which case you have an opportunity to capitalise on.

Adjusting pricing strategies based on Price Index

Any pricing strategy will include a margin over the cost and how much of this margin you can afford to lose in order to remain profitable. When your price index is marginally below or above 1, then you can adjust your price to match or compete as long as it does not affect your margins significantly. This way you can be competitive without affecting your business.

However, when your PI is off by a significant margin that is a sign to dive deep to find out the cause and adjust your strategy accordingly.

For instance, if you are a multi-brand retailer whose Price Index for a particular product is very low, then there is a chance that your competitor is getting a better deal from their supplier than you are. You can use this information to renegotiate with your supplier.

Final thoughts

Price Index on its own helps you identify the real competitors for your business and understand your position among them for a product or product segment. Pricechecker Price Index when combined with competitors’ price and promotion data will give you actionable insights that will not only make your pricing strategy unparalleled but ensure that your strategy evolves in response to market trends and competitor prices.