What is Price Comparison Software?
Any price comparison software, whether internal development or a third-party service, is a tool designed to find the prices of your competitors for any product in your portfolio. Generally speaking, the effectiveness of such a solution is evaluated by the three most important factors:
- Data and crawling accuracy.
- Functionality (the ability to work at different sites and platforms such as google shopping or Amazon with different product data).
Price comparison tools are essential for retailers who use competitive and market-based pricing strategies in their business activities. With the knowledge of competitors, they can be one step ahead of rivals, can react to price changes in time, think about further tactical steps, and build separate strategies for specific products to attract new customers.
Choosing the right price comparison tool is easier said than done. Several price checking software tools exist on the market, and from a surface-level point of view, they all tend to offer the same product for your company. However, key differences exist between the price comparison software providers you may find. This article will help you identify important factors that can differentiate between an adequate price comparison tool and an excellent one, so that you may select the best software according to your company's needs and goals.
How does price comparison software work?
The flow of a price comparison tool can be described as an action of five stages, some of which are repeated cyclically. The picture below illustrates the operation algorithm of the basic solution from Competera, which we call Competitive Data.
During the first stages, the retailer provides data on the products they’re going to monitor. An effective price comparison solution is able to adapt to the client’s current operating activities. That is, use the following formats, sources as well as flows of where this data is stored and how it proceeds.
Once the data is obtained, the comparison process begins. Depending on the retailer’s needs, modern systems can compare prices as well as EAN, UPC, images, titles, descriptions, units of measurement, etc. Each received data point (comparison product vs. product) goes through two levels of verification, confidentiality scoring system, and manual QA. For example, in Competera, each client can choose automatic, manual, or hybrid product matches.
Finally, the received data are delivered to the storage the client works with. For example, to a separate cloud project using Google BQ, Amazon S3, or to the client’s server. In all of the cases, all matches and info are available from the user’s dashboard.
The most exciting thing is that the price comparison is just the tip of the iceberg. This data stores much more valuable information, which can be processed by modern ML-systems. Here are just a few examples of what you can learn from the obtained data points. You can:
- Find out who your real competitor is and how different players impact your sales.
- Find out the recommended first price on your new products.
- Arm your team with the market insights on how to increase sales or margin.
How to choose the right price comparison tool
The most important aspect of choosing the right price comparison software comes down to the seemingly minor aspects of how the tool being offered works. They are far more critical than it may seem at first, and also may be difficult to identify at a glance. When you are taking a look at the software being presented to you, take careful consideration into the following details:
Check the data. The data collected and analyzed by any price comparison tool will be the basis of your pricing strategy. It is one of the most important factors that can make or break a good price comparison software. Knowing this, take the time to find out how accurate the data offered by this tool is. A data rate of 90% may sound great at first, but keep in mind this can translate to you possibly comparing thousands of products incorrectly as a result.
Also try to find out how often this data is checked for accuracy, and when it is delivered to you. Many eCommerce retailers utilize dynamic pricing, meaning they change their prices up to several times per day. Your software provider may be giving you very accurate data that was collected at noon each day, but if you’re comparing and changing your own prices at 3 pm, this data may already be out-of-date and, therefore, much less useful to you for price comparison. Ideally, as a retailer, you should be able to request your data at the exact time that you need it.
Read through the SLA. Your service level agreement is vital in understanding exactly what this price comparison tool can guarantee you in terms of quality, accuracy, delivery, and customer support. Ask yourself the following questions:
- What is the minimum/maximum accuracy rate this company can promise me in their SLA?
- Does the SLA state that the data provided to me can be customized according to my needs? Can you change what competitors you are comparing prices with when you need to, or are they giving you large, general data-dumps of information on companies you do not need to be paying for?
- Do they offer a pay-per-use model so you can avoid unnecessary costs? How accessible is their customer support service?
All of these questions are vital in understanding not only the quality of the price comparison tool in general, but also the dedication the provider has to your company and their ability to customize their product so you can avoid spending extra money on services you do not need.
User-friendliness. The main objective of a price comparison tool in regards to your pricing strategy is to save you time and money. If the platform the software provider offers is difficult and time-consuming to use, it should be a huge red flag for you that it may not be worth its cost.
Profitability. Your price comparison software exists to save you time and money. If the software isn’t easily integratable into your current pricing strategy, you could end up investing far more funds into using the software than what it’s worth. Typically, you should be able to try some sort of demo or trial of the software, which can help you determine how profitable it will be for your company, and whether or not it is worth the investment.
Does my business need the price comparison solution?
Our recent research has shown a significant increase in online shopping associated with changes in user behavior patterns. The good news is that e-commerce retailers benefit from the comparison tools the most. This type of software fits both retailers selling to the end customer and vendors who, for example, can monitor adhering to MAP by their customers. Moreover, even if you are selling a unique product, today's technology can match and compare even similar products (e.g., by color or functionality) and give you a complete picture of the market.
On the other hand, if your business is fully offline, we recommend considering other, even more advanced, pricing strategies without the need to use competitive data.
Choose your software wisely
If you want to remain competitive in the market and ensure that you are always providing the best prices for your products, a price comparison tool can help you do so whilst maximizing your sales and increasing profit in the process. Not all price comparison software is the same, though, so keep in mind these important factors that can really make or break the usefulness and profitability of any price comparison tool. Hopefully, with this knowledge, you can select the best tool according to your company’s objectives.
The best way to compare prices implies the use of price comparison websites and tools. However, they work only for online shops while there are no such means for brick-and-mortar stores.
The cheapest price for a product could be found on price monitoring websites or online marketplaces.