The right pricing strategy can make or break a business.

Striking a balance between being competitive and maintaining profitability is a challenging feat, especially as market dynamics shift rapidly.

Online pricing intelligence empowers businesses with data-driven insights into competitor strategies, customer behavior, and market trends, helping them make informed, agile pricing decisions to maintain a competitive advantage.

Read on to explore pricing intelligence, how it works, and how tools like pricing intelligence software can help businesses outpace the competition and maximize profits.

What is pricing intelligence?

Pricing intelligence is a data-driven strategy that uses insights such as competitor pricing data, customer behavior, and market trends to optimize product pricing.

This pricing strategy requires ongoing monitoring of competitors’ prices and consumer and market data.

Effective pricing intelligence allows businesses to make informed, agile adjustments to their pricing in response to market changes.

Pricing intelligence vs. dynamic pricing

Pricing intelligence and dynamic pricing are similar because they both involve adjusting prices based on data, but they have a cause-and-effect relationship.

The key difference is pricing intelligence is the process of collecting and analyzing competitor, customer, and market data to make better-informed pricing decisions.

Dynamic pricing is the execution of those decisions—adjusting prices in real-time or periodically based on the insights gathered through pricing intelligence.

How does pricing intelligence work?

Pricing intelligence works by collecting and analyzing competitor, customer, and market data and adjusting your pricing based on these insights.

Here’s a high-level breakdown of how analyzing this data can help optimize prices to stay competitive and increase profit margins.

Competitor data analysis

Who is selling similar products or services?

Understanding market share and the competitive landscape can help you adjust your own price points to maintain an advantage.

Visit competitor and review sites to learn about their product offerings, packages, and pricing.

You can also reference market research and online forums to see what customers say about the product and the value for the money.

Some organizations use scraping tools or APIs to extract competitor data.

Ensure you’re following company policies and best practices for your data-collecting strategies.

Now that you’ve gathered the necessary information, it’s time to put those insights into action. The goal is to identify patterns in your competitor data.

When did prices fluctuate across the market? Do you see any trends like seasonality that impact pricing?

Parsing through all this data manually would be a nightmare.

Many organizations use pricing monitoring or market research platforms to collect and analyze data.

Customer behavior analysis

Beyond competitor pricing, understanding how consumer behavior and market shifts affect pricing can help you make better-informed decisions to maximize profitability.

How can you glean these insights? Go directly to the source.

Interview customers or get their opinions using surveys or focus groups. Look at social media channels and online forums to see what customers are saying.

Segment customers based on demographics, like age and income, or behavior, like purchase history.

You can also get useful information from your website analytics to see where customers convert or drop off in the buying process.

Analyzing this data can help you identify trends in customer behavior and preferences.

You can use these insights to set competitive pricing based on customer preferences or forecast future behavior and market trends.

What is pricing intelligence software?

Pricing intelligence software is a tool businesses use to track and analyze competitor pricing, market trends, and customer purchasing behavior.

A pricing intelligence platform automates data collection, allowing businesses to keep an ongoing pulse on the competition and market and make data-driven decisions to enhance competitiveness and profitability.

Benefits of pricing intelligence software

Pricing intelligence software tracks data from various sources, including competitor websites, customer feedback, and industry reports, providing businesses with actionable insights.

Organizations can use this information to develop competitive pricing strategies,

identify opportunities for promotions or discounts, predict future pricing trends based on historical data, and respond to market changes with real-time pricing adjustments.

But collecting and analyzing the data is only the first step.

You must take action based on this pricing information to see the impact. That’s where a complementary tool like CPQ (Configure Price Quote) software is invaluable.

CPQ tools include dynamic pricing so organizations can adjust pricing in real time based on market demand, competitor pricing, consumer behavior, and current inventory.

CPQ platforms also offer pricing rules to make it easy to set parameters for different scenarios like product discounts, tiered pricing, or product bundles.

Together, pricing intelligence and CPQ software are a powerful combination for optimizing pricing strategies to align with customer behavior, competition, demand, and business objectives.

Pricing intelligence in action

To demonstrate how this method works, here’s a hypothetical example.

CloudStream, a SaaS organization, provides data visualization tools for mid-sized businesses.

Their competitors frequently adjust their pricing models, offering discounts, new pricing tiers, and product bundles.

CloudStream notices they’re losing potential customers due to being priced higher than competitors for similar features.

They also want to collect more insights into how their pricing aligns with customer preferences or market trends.

CloudStream implements a price intelligence tool to gather and analyze data on:

• Competitor pricing: Monitoring competitor websites and pricing changes in real time, including discounts, promotions, and new offerings.
• Customer behavior: Analyzing data from surveys, website heatmaps, and sales data to identify which features customers valued most and what pricing tiers were most attractive.
• Market trends: Tracking industry trends to identify seasonality, such as increased demand for analytics tools during certain times of year.

Using these insights, CloudStream refined its pricing strategy:

• They introduced tiered pricing to account for customer needs, offering a basic package for smaller businesses while bundling premium features in higher tiers.
• Based on competitor data and customer behavior, they launched targeted promotions to attract budget-conscious customers during a high-demand period.
• They adjusted their messaging to highlight unique features their competitors don’t offer, such as superior data security and customizable dashboards.

Using pricing intelligence and data to inform your strategy

Pricing intelligence can help businesses use data for smarter, more informed decision-making that drives profitability and customer satisfaction.

When combined with tools like CPQ software, pricing intelligence becomes even more powerful, enabling businesses to offer the best prices to align with business goals and market demands.

See how PandaDoc CPQ can help you implement strategic pricing and optimize your sales process to create fast, accurate quotes and drive revenue growth.

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