Price analysis is critical in determining the value of a product, although it was not given the same importance in the past as it is today.
This is largely due to the tremendous advances in information technology. Whether consumers are shopping for business or personal use, they have access to vast amounts of price data by entering a few relevant search terms. Simply put, the online shopper is now much more price-aware and sophisticat than the consumer of the past. Shoppers today understand that they can find better prices and better value for money by using modern technology.
The first thing to recognize when analyzing a product or service is that the cost of the product is the primary reason online shoppers choose a product or brand. Quite often, online stores have similar or identical product ranges: that is, they offer the same products and therefore are forc to compete to offer the best value.
Definition of price analysis
Price analysis is us in marketing, where it refers to the reactions that consumers have to theoretical prices establish through research and analysis.
In general, price analysis can be defin as a process recent mobile phone number data in which the price of a product is examin in detail and assess. Because this procure provides valuable information, it is often the step before selecting a pricing strategy. However, it should not be confus with cost analysis, as it does not include an assessment of the costs that may arise for a given product.
Each business may have its own preferr “primark effect”, quality has a price approach to evaluating available product options. Using various price analysis methods, they can compare the price of the product on offer to any alternatives or similar products that competitors may have on the market.
Price analysis is necessary in the following situations:
- in any test marketing;
- when choosing an implementation strategy;
- for positioning strategy;
- to evaluate new product ideas.
The analysis applies not only to new products, dating data but also to existing ones. This may be due to changes in your target market, in the competitive environment, if your product is not selling well, or simply because you have made changes to your marketing strategy since the product was launch.
Price Analysis Process
Your price analysis begins with considering how your product market will react to the prices you offer. Thinking about how buyers will react to alternative prices is always a tricky process: on the one hand, if the price is too high, you won’t be able to increase sales, and on the other, if the price is too low, potential buyers may become wary and concern about the quality of the product.
Take a closer look at the market: The first thing you ne to know is where you are. What products have similar features to yours? Who offers alternative products that can offer the same as yours? How much do they cost?
Price index
Having identifi competitors in the market, perform some calculations and determine the average market price of the product in question. To calculate the price index, you can use the following formula:
Competitor’s price / Your price x 100
This formula is us to look at prices in more depth and detail. For example, it may indicate differences in product procurement. Perhaps your competitor is getting better prices from suppliers, allowing them to offer lower prices. Analyzing where your prices are better or worse than your competitors will allow you to adjust your prices accordingly where possible.
Historical price data
Monitoring competitors’ prices is a critical process, although it can be time-consuming. However, by gradually collecting information, you will be able to identify patterns and trends in competitor behavior. This information can then be us to inform your loss-free pricing strategy.
Don’t just look at your competitors’ data – take a look at your own too. This approach will give you a realistic idea of where you could gain an ge in the market and which of your products could enjoy elastic demand .
Of course, price analysis takes a significant amount of time, so you might also want to consider purchasing software such as the iDatica price monitoring platform to help you with this challenging task.
Various strategies
To develop the right pricing strategy for your products, you ne to analyze the pricing situation. Analyzing the pricing situation can include studying a single product line or an entire assortment, as well as choosing the right pricing strategy for a new brand or product. You should also conduct an analysis that links volume and price to check the elasticity of your price.
There are several different strategies, which include (but are not limit to):
- price level that guarantees the sale of new products – the company sets an initially low price;
- Skimming pricing is the opposite of pricing that involves winning a market by setting a lower price;
- economic pricing;
- competitive pricing.
Advantages and Disadvantages of Price Analysis
Unfortunately, setting the price of a product is not always as simple as it should be. As with many things, there are advantages and disadvantages to doing a price analysis without professional help. Sure, a price analysis can ensure that you cover all the costs that you have invest in the product and that your product is attractive to customers. It can also ensure that you are taking all your costs into account and not setting your prices significantly higher than your competitors. However, this approach will only mean that you will not see the sales volume that your company nes.
Of course, the downsides of price analysis can arise when the strategies you decide to use fail. This could be because your product or service is not attractive enough to your customers in terms of cost, or a competitor’s brand appears more reliable – there are many factors that can influence the outcome.
When conducting an internal pricing analysis, it can be difficult to determine where the sweet spot is for pricing your product or service before it is launch. This can have a detrimental effect on your profits. That is why it is important to include accurate market data in your analysis to determine where you currently stand in the competitive landscape – only then will you have a better chance of success.