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Competitive Pricing: The Advantages & Disadvantages

by Joanna Foyle on 10 Jun 2020
Topics pricechecker Share:

Traditional pricing strategies that have once dominated the retail sector are now being redefined due to tough competition in the Ecommerce industry. Today, competitor pricing is taken into consideration to decide the appropriate pricing for a product. The competition would define the price of the product.

What is a competitive pricing strategy?

It is a powerful strategy that is used by the retailers to set pricing for the product on par with competitor prices.

To set the price, the retailer must gather information about the competitors and their product prices, as the price of the product is continuously changing. When the competitor of a retailer changes the price of the product, then the retailer must respond quickly and change the strategy. If you want to set competitive pricing for your product, you must do an extensive market analysis.

It is up to the online retailer on how to set the pricing for the product. The person can set a lesser price than the market price or set average pricing for the product or high pricing depending on the product.


If you are selling luxurious products for affluent customers, you must set the best price against your competitors. When you make this decision, you may gain loyal customers, but the conversation rate will be less. On the flip side, if the retailers want to improve the sales for the products, they must set a lower price for the product than their competitors. There will be many price points for the products. If you set a competitive price, it does not mean that you are fixing a price to the competitor, but it means that you are considering the price of competitors to test different price points.

It is impossible to get the pricing data of the competitors manually. Many retailers will use price tracking software or have an in-house price tracking engine to track the price that is set by all your potential competitors for your key product in the market, such as Moonbow’s pricechecker.

Competitive pricing in real-time

Before buying any product, the first thing done by a customer is to compare the price and other features of two to three similar products sold by different manufacturers. This is the main reason why retailers will track the pricing of competitors to stay competitive.

When you take the example of wearable products in the market, there are a few brands that are charging a high price for the product since they have spent a lot to promote and boost the brand reputation in the market. Now, the brands became popular in the market. One such company is Fitbit. The same applies to Apple. The customers are willing to pay a high price to get home the apple products despite the fact that they do the same tasks as the other laptop or phone brands.

Advantages of competitive pricing

Disadvantages of competitive pricing


Every Ecommerce strategy has its advantages and disadvantages, and competitive pricing has no exemption from it. By now, you might have had a clear cut idea of the advantages and disadvantages of competitive pricing. These points will help you set the best price that is feasible for your business.