The prices of a business' competition can greatly affect its own pricing strategy. If the competition is offering similar products or services at a lower price, the business may need to adjust its prices to remain competitive. This could involve reducing prices, offering more value for the same price, or justifying a higher price with superior quality or service. Conversely, if the competition is charging more, the business has an opportunity to capture market share by undercutting their prices, or it can match their high prices to maximize profit, assuming the demand is inelastic.
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