5 steps to Set Proactive Prices

Become a retail winner with price optimization software

A big part of pricing successfully, is done by taking a look at how consumers view your item parallelly to what you’d like to make from it. However, the consumer opinion is always changing. You have to respond to this changes in advance.

Don’t wait until your finance director reports a decrease in revenue or the head of the sales department notifies you about a sales decrease. Figure out how to optimize your pricing to maximize sales with the right competitive pricing software.

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Proactive Pricing

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So what exactly is proactive pricing?

It’s a pricing method where businesses anticipate both market and rival changes prior to when they’re supposed to happen based on competitor data. Then, they restructure parts and implement activities in order to be more ready.

Some of the challenges associated with proactive prices include:

  • Tough competition or not doing enough research on them
  • Continuously developing shopper wants and needs
  • The growing retail/channel environment
  • Repricing annually or just every once in a while, instead of changing it on an ongoing basis, heavily depending on where the market’s at
  • Scaring away shoppers with price changes they don’t agree with

These problems are especially prevalent in businesses where they follow the prices of competitors instead of setting their own. In other words, the changes made are reactive.

Proactive Prices

Set the rules!

Keep in mind that having competitive prices doesn’t entail having the lowest prices, but instead gearing towards making the most of each situation. In order to make this happen while also utilizing a proactive pricing strategy, it’s imperative to become a market leader. A proactive pricer doesn’t only track their competitors, but they also set the rules of the game on the market and the optimal prices by taking into consideration how their rivals act, the area, the brand awareness and the demand.

Proactive Pricing strategy

Are you a Proactive Pricer?

Answer the questions to see whether or not you’re a proactive pricer.

  • Do you use predictive analytics tools to anticipate the demand?
  • Do you know how to establish pricing leadership in your domain?
  • Do you know the economic value of the product to your customers?
  • Are you able to predict the demand in different circumstances?
  • Do you know the price elasticity of your products?
  • Does the industry curve help you with analytics?
  • Does the industry curve help you with analytics?
  • Would you be able to describe competitors price changes?
  • Is your pricing approval more a volume discount or a control mechanism?
  • Do your sales people complain your prices are higher than your rivals’?

Think about the answers. Proactive, instead of reactive, is the way to go if you want to maximize profits.

Knowing the value of your products

Additionally, don’t be afraid to utilize value-based pricing. Consumers are typically affected by changes in prices that they don’t agree with, but you can use value-based pricing in order to figure out the middle ground in the situation.

Take for instance, airplane seats. You’d think they’re all the same, but in reality, each consumer has their own perceived value of it. Therefore, you have to strive to position your company well so that you are competitive, but at the same time, you want to make sure that you’re making money.

Competitor price monitoring

...and the competition

However, let’s take a step back in order to figure out the first step you need to take in order to make money with proactive pricing. You initially need to figure out what exactly your good or service is:

  • If it’s a specialty, then people believe that the value is high and the competition is low.
  • If it’s a commodity, then the value is low, but the competition is high.
  • If it’s a threshold item, then they’re unknown, so the value is also unknown. The competition is low, too.
  • If it’s an engineered commodity, then it’s high in both value and competition.
Competitive price analysis

How to become a proactive pricer

Since airplane tickets are a commodity, let’s take a look at the five steps that drive the proactive pricing strategy.

Although pricing does tend to be one of the most crucial purchasing points, it’s backed up by everything else. So you’ll want to make sure that all bases are covered and working in sync.

Additionally, since today’s online channel is fast-paced and constantly changing, so will your sales opportunities, which is why it’s crucial to utilize tools such as the price monitoring platform offered by Competera. With it, you can have historical and current information readily available to you about both your company and your rivals, thus catering to customers by offering the optimal value in order to make the optimal sales, as well as maximize profits.

Competera provides you with:

Alerts, reports, and the results sent via API, an advanced library of pricing rules

Results sent via API, an advanced library of pricing rules, and reports

Tailored pricing programs, Guidance hub, testing

Tailored pricing programs, testing, and a Guidance hub

Tailored pricing programs, Guidance hub, testing

Price elasticity calculation, predictive pricing, and prices per segment

Implement proactive pricing

using predictive pricing analytics from Competera

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