Strategy Analyzing Costs, Prices and Competitors Offers

Strategy Analyzing Costs, Prices and Competitors Offers

Companies can use cost analysis, market demand, cost competition, price competition and possible competitor reactions as a basis for pricing. Companies also need to compare the cost with the cost of competitors, whether the cost of production is lower or higher as well as the price and quality of the competitors offer. By knowing the cost, price and quality of competitors, companies can use as a point of orientation for a set price.
The company had set a price close to the price of a competitor, if the competitor is a major competitor. If the quality of the bid higher quality than competitors, companies can set prices higher than competitors, but if the quality is lower than competitors offer, then the company should set prices lower than competitors. Nevertheless it is possible competitor change the price in response to the price set by the company.