Highly competitive pricing is a pricing strategy used by retailers and ecommerce businesses to gain an advantage over their competitors by offering products and services at lower prices. This strategy is often used in highly competitive markets where there are many similar products or services being offered by multiple businesses.

Pros and cons of highly competitive pricing

By offering lower prices, businesses hope to attract more customers and increase their market share. However, this strategy can also be risky as it may lead to lower profit margins. It is important for businesses to consider their cost structure, production and distribution costs, and target customers while implementing highly competitive pricing.

One of the key challenges of highly competitive pricing is determining the right price point. Businesses must strike a balance between offering low prices to attract customers and maintaining profitability. It’s also important to track competitor prices and market trends in order to make informed pricing decisions.

Another challenge is to keep prices lower than competitors for long enough to gain an advantage, without sacrificing profitability.