Every business needs to know how the prices of its products or services stand against the competition.
Comparing prices of complex products can be difficult. Cars, computers, consumer electronics, domestic equipment have different characteristics, parameters and specifications. Hotel rates, airplane fares, education programs, medical treatments include different ranges of services in their prices. So we need to make sure we are comparing apples to apples in our analysis.
A proper pricing analysis is based on the following concepts:
– There is a “listed price” which a customer sees on the price tag. This price depends on product’s features and attributes which are different across producers and product categories. Therefore, listed prices rarely give a fair indication of product price position.
– To perform an accurate pricing analysis we take “adjusted prices” by “stripping off” the products of certain features to bring them down to closer equivalents. The implied prices of such products become comparable and show which one is really more expensive.
My publication explains price analysis further and provides the necessary tools and techniques. It also explains the basics of market price positioning and pricing strategies used by producers to convince customers to buy more expensive (premium) products.
This publication is part of my sales and product analysis series which also includes:
- Analyzing Sales and Product Performance (https://marketplace.corporatefinanceinstitute.com/finance-templates/financial-planning-analysis-fpa-templates/variance-analysis-portfolio-statistics/)
- Price-Volume-Mix Analysis (https://marketplace.corporatefinanceinstitute.com/finance-templates/price-volume-mix-analysis/)
- Measuring and Modeling Seasonality (https://marketplace.corporatefinanceinstitute.com/finance-templates/measuring-and-modelling-seasonality/)