The first quarter of 2025 was exceedingly challenging for pricing leaders and teams. Rapid geopolitical, supply chain, and market shifts stretched and, in some cases, went beyond the limits of pricing departments. As a result, businesses across the board were unable to keep their pricing models up-to-date, resulting in profit margin and market share losses.
Traditional market research processes and manual price setting procedures are simply too slow in 2025. To successfully grow revenue in modern markets, you will need to be more agile. But more importantly, this imperative is not limited to current economic conditions. Long-term, the speed of market changes will only increase, which is why you will need to develop a sophisticated competitive pricing strategy in order to retain and grow your customer base.
In this article, we comprehensively cover competitor-based pricing strategies, including:
A competitive pricing strategy is proactive instead of reactive. It's a data-driven approach to setting prices based on what's happening in the market around you, not just what's happening inside your business. Competitor-based pricing strategies focus on finding the optimal price for your product, balancing sales volumes vs. profit margin on each sale based on real-time market conditions. A true competitor-based pricing strategy gives you visibility into your category, your rivals' pricing moves, your product availability versus theirs, and even when new products hit the market.
This strategy uses public data (like prices on e-commerce sites or government tenders) to help businesses:
Competitor-based pricing strategies do take into account internal data as well as external conditions. For example, direct metrics like the cost of production or your historical pricing, and indirect factors like customer loyalty are also examined. The goal is to understand your internal factors within the larger context of the conditions you operate in, allowing you to determine the optimal price for each product to increase revenue.
According to recent research, a 1% pricing increase yields an 8.7% increase in operating profits, yet 30% of companies' pricing decisions are not delivering the best price. There is a multiplicity of moving factors that impact competitive pricing: market trends, overall economic conditions, consumer demand, your business model, and production costs, just to name a few of the considerations in every pricing decision. However, there is one critical factor that has a significant impact on all others: the pricing strategy of your direct competitors.
Markets don't wait for quarterly reports anymore. Prices shift, competitors launch new promotions, and product availability changes, sometimes overnight. Without AI tools to collect, analyze, and present data to decision-makers, you cannot respond to these rapid changes nearly every day. Consequently, your pricing method will likely be outdated by the time it is implemented. You will lose sales to more agile competitors, or you will miss critical profit margin increases. Either way, you are leaving money on the table unless you are engaging in competitive pricing analysis.
Many mid-market companies and enterprises are expanding into new countries or market segments this year. Traditionally, you'd pay for a formal market research study, wait weeks for results, and hope the data was still relevant. Oftentimes, new market strategies are largely based on guesswork, which is risky, even for highly experienced pricing teams. To be successful, you need to track pricing trends, assortment gaps, and average prices before entering a market, allowing you to start with competitive prices.
For pricing teams, especially in areas like commodity trading or B2B tenders, independent data validation is key. Public data can serve as a powerful second opinion, helping you confirm whether your pricing strategy aligns with market reality. When you're making high-stakes pricing decisions, having that external benchmark isn't just helpful—it's essential.
Until recently, only large enterprises could afford comprehensive pricing intelligence tools or global market research subscriptions. That's changing. Affordable, AI-driven platforms are making it possible for small and medium businesses to gain the same visibility without hiring a team of analysts or managing complex data pipelines. Specifically, Revenue AI is a leading pricing solution for mid-market and small businesses.
A competitor-based pricing strategy in 2025 means having the right data at the right time. Volatile, quick-moving markets require dynamic pricing agility. In other words, you need to have the infrastructure to rapidly analyze competitor pricing data and implement novel prices in response accordingly.
The rise of advanced AI pricing tools is changing the game. Make no mistake, if your competitors aren't already looking into pricing solutions, they will likely do so in the coming few years. If you want to grow, or even maintain, your profit margins, sales volumes, and market share in the next five years, you will need to pinpoint and implement optimal pricing changes at any given moment with the inhuman efficiency of automation and artificial intelligence. Traditional market research and spreadsheets are simply too slow to accurately reflect markets that move at current speeds. Leveraging pricing solutions will be foundational to competitive pricing in 2025.
Here's how to develop and continuously improve a competitor-based pricing strategy in modern markets:
Advanced AI engines like RAI's Digital Module continuously acquire data from public sources like online retailers and tender platforms, unifying it with your internal data, and delivering immediate insights. Business users and pricing teams get alerts when a competitor drops a price, launches a new SKU, or goes out of stock. The tool is able to do this at scale, across multiple countries, currencies, and retail platforms.
This functionally replaces the traditional market research process. However, instead of weeks, you get the data in real-time, which is vital in the shifting markets we see today. Moreover, AI is able to scrape and analyze at a scale that would be impossible for more traditional forecasting practitioners to achieve, thus allowing you to practice responsive inflationary pricing.
Once you've collected competitive pricing intelligence, the next step is to analyze it in context. For example, Revenue AI doesn't just dump raw data in front of you; it interprets the information in intuitive dashboards that visually depict findings. The tool flags relevant pricing movements, highlights how your offerings stack up against competitors, and reveals pricing gaps and white space opportunities you can leverage.
This kind of analysis lets you go beyond anecdotal evidence or gut feelings. You can quantify exactly how much your prices deviate from the market, how often competitors change pricing, and what patterns emerge in their SKU launches or promotions.
Armed with insights from the analysis, you can now make confident, data-backed pricing decisions. Whether your goal is to undercut a competitor, defend a premium pricing, or penetrate a new market with a smart price-pack strategy, you have the insights you need to intelligently choose your approach.
This is where internal alignment is key. Pricing leaders need to translate market intelligence into recommended actions that sales and product and sales teams can get behind. The most successful organizations empower their teams to make informed decisions quickly, based on a shared understanding of real-time market dynamics and product prices.
Competitor-based pricing isn't a set-it-and-forget-it effort. Markets change by the hour, and so should your awareness. AI-powered dashboards provide a living snapshot of what's happening across your category, flagging pricing moves, product launches, and availability shifts the moment they happen.
This always-on visibility means you can validate your strategy on the fly. If a competitor drops their price, you will know. If a new SKU pops up in your region, you will get alerted. And if your strategy needs to pivot, you can do so fast—without losing momentum or margin.
Your pricing structure directly impacts your financial margins. The more effectively optimized your pricing strategies are, the better your margins will be. In fact, pricing strategies yield a 2-7% increase in returns on every sale. An effective pricing strategy has a measurable impact on your profitability. However, to see these returns, you have to choose the right type of pricing strategy.
Here are 5 competitor-based pricing strategies to consider for your business:
If you have been paying attention to the pricing world, you have likely encountered dynamic pricing. As one of the most foundational and straightforward pricing strategies, it is widely practiced by businesses with advanced pricing solutions. Dynamic pricing is a form of competitive pricing analysis; it uses real-time market data, such as competitor pricing, supply fluctuations, and consumer demand, to automatically adjust your prices. Tools like RAI's Digital Module make this scalable, enabling you to update pricing at the pace of the market.
If you're entering a new market or launching a new product, penetration pricing allows you to gain traction by offering the lowest price point initially, garnering an influx of price-sensitive customers who are looking for identical products without the premium price. By coming in with a low initial price, business owners focused on customer acquisition can see rapid success. With real-time competitive monitoring, you can strategically undercut competitors, capture market share, and then gradually increase your selling price to a healthy profit margin once customer adoption is solidified.
This competition-based pricing strategy focuses on pricing products based on the perceived value to the customer rather than the cost of production. AI-enhanced pricing tools facilitate value-based pricing by quantifying potential customer expectations while also analyzing customer behavior, competitor positioning, market price, and demand signals.
Rather than offering just one standard SKU, use PPA to make strategic pricing decisions and create variations in size, bundle, or pricing tiers tailored to different segments. This competition-based pricing structure can be a powerful way to optimize price sensitivity across diverse customer profiles. PPA is especially effective in competitive categories where differentiation is key.
Sometimes, the simplest strategy is to monitor competitor prices—and then respond with surgical precision. By using AI to detect competitor moves (like stockouts, promotions, or pricing shifts), you can quickly react with price matching or undercutting tactics that protect or grow market share with price-sensitive customers without sacrificing profitability.
Pricing success in 2025 demands more than intuition or outdated playbooks—it requires speed, precision, and a real-time pulse on your competitive landscape. As we've explored, the stakes have never been higher. Market volatility, global expansion, and shifting consumer expectations have made agile, data-backed pricing strategies essential to maintaining profitability and relevance.
AI-powered platforms like Revenue AI can level the playing field, giving your business instant access to competitor intelligence, pricing benchmarks, and actionable insights. Investing in your pricing infrastructure to facilitate competitor-based pricing is not just about defending your market position. It's about building a pricing engine that learns, evolves, and drives smarter decisions over time. As your competitors get faster and leaner, your ability to respond in real-time will define whether you lead or lag.
If your team isn't already leveraging dynamic pricing technology and competitive analysis, now is the time to start.