Leveraging Competitor Pricing in B2B: Strategies for Smarter Decision-Making (Part 1)

One of the most frequent questions companies ask me is how to leverage competitor pricing data to improve their strategies. It’s an enticing idea: imagine having a clear picture of where your competitors are positioned and using that information to fine-tune your own pricing strategy.

But here’s the catch—competitor pricing data isn’t a magic potion. While it’s a valuable input, using it effectively requires nuance, strategy, and an understanding of its limitations. In Part One of this two-part series on competitor pricing, we’ll explore how businesses can approach competitor pricing without falling into common traps—and how pricing professionals can make informed, actionable decisions.

The Risks of Overreliance on Competitor Pricing

Relying too heavily on competitor data to inform your own pricing strategy can backfire. Why? Because there’s no guarantee your competitors are making the right decisions. For example, if a competitor is underpricing their offerings to gain market share, blindly following their lead could mean eroding your margins unnecessarily.

Another common pitfall is treating competitor pricing as the sole source of truth. Too often, businesses try to match competitor prices line-by-line instead of stepping back to assess broader market trends. This can lead to overcomplication and distract from what really matters: understanding your own value proposition and the needs of your customers.

Determining Relevance in Your Pricing Strategy

Competitor pricing data is more relevant in some scenarios than others. To use it effectively, you need to assess both your industry and the specific context of competitor price changes.

When Competitor Pricing Is Most Relevant

In industries where products are largely viewed as commodities—such as raw materials, basic chemicals, or other undifferentiated goods—pricing is often the primary driver of purchasing decisions. Customers see little to no difference between your product and your competitors’ offerings, meaning even small price differences can sway buying decisions.

If your products are easily substituted by competitors, leveraging competitor pricing becomes more critical. This is particularly true in industries like standardized office supplies or industrial safety supplies, where customers can switch to a similar product without significant switching costs or quality impacts.

Price-Sensitive Markets 

In price-sensitive markets, where customers prioritize cost over brand loyalty or value-added features, competitive pricing is essential to staying in the game. For example, in industries like transportation or logistics, procurement teams often focus on finding the lowest-cost option.

Why Competitors Change Their Prices

Understanding why a competitor has changed their prices can help you determine whether the move is relevant to your business. Here are some common reasons competitors might adjust prices:

• Overstock or Inventory Pressure: Temporary discounts to clear excess stock.
• Promotions or Customer Acquisition Strategies: Short-term tactics, often subsidized by marketing budgets.
• Cost Structure Differences: Operational efficiencies or economies of scale enabling lower pricing.
• Market Signals: Adjustments reflecting broader market trends, like rising demand or supply chain constraints.

How to Assess Relevance

When competitor pricing changes occur, take a step back and evaluate their relevance to your strategy. Ask questions like:

• Does this price change impact the perceived value of my product?
• Is my market positioned similarly to my competitor’s market, or are their actions unrelated to my customer base?
• Could their price increase create an opportunity for me to gain market share by holding steady or lowering my price? Or would doing so negatively impact my brand’s perception in the market?

By understanding both the context of your market and the motivations behind competitor price changes, you can make informed decisions that align with your long-term goals. 

In Part Two of this blog, we’ll explore the challenges of using competitor pricing data, key legal and ethical considerations, and a practical framework for responding to competitor price changes. Stay tuned! 

Need expert guidance on optimizing your pricing strategy? Contact us today to learn how Zilliant can help you navigate competitor pricing with confidence and drive profitable growth.

Matthew Knaggs is a Senior Business Value Lead at Zilliant, where he works with customers and prospects to demonstrate the ROI and business impact of implementing Zilliant solutions.