Competition-Driven Pricing

AAA

DEFINITION of 'Competition-Driven Pricing'

A method of pricing in which the seller makes a decision based on the prices of its competition. Competition-driven pricing focuses on determining a price that will achieve the most profitable market share and does not always mean the price is the same as the competition, it could be slightly lower. Research is done in an attempt to eliminate the competition and it is important to accurately interpret communication signals in order to prevent a price war.

INVESTOPEDIA EXPLAINS 'Competition-Driven Pricing'

Determining how to profitably achieve the greatest market share without incurring excessive costs requires strategic decision making. As such, the focus of the firm should not solely be on obtaining the largest market share, but in finding the appropriate combination of margin and market share that is most profitable in the long run.

RELATED TERMS
  1. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  2. Low-Hanging Fruit

    A commonly used metaphor for doing the simplest or easiest work ...
  3. Predatory Pricing

    The act of setting prices low in an attempt to eliminate the ...
  4. Marketing Mix

    Usually referring to E. Jerome McCarthy's 4 P classification ...
  5. Customer-Driven Pricing

    A method of pricing in which the seller makes a decision based ...
  6. Price War

    When companies continuously lower prices to undercut the competition. ...
Related Articles
  1. Investing

    Does perfect competition exist in the real world?

    First, let's review what economic factors must be present in an industry with perfect competition: 1. All firms sell an identical product. 2. All firms are price-takers. 3. All firms have a relatively ...
  2. Fundamental Analysis

    Key Players In Mergers And Acquisitions

    Strategic acquisition is becoming a part of doing business. Discover the different types of investor groups involved.
  3. Personal Finance

    Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.
  4. Mergers are not the same as acquisitions.
    Investing

    What's a Merger?

    Mergers are not the same as acquisitions. In an acquisition, one company buys and subsumes another company, leaving only the buyer in place. In most mergers, both companies merge to form an entirely ...
  5. Investing News

    Looking to Open a Franchise? These Topped The List In 2014

    These franchise businesses stood out in 2014.
  6. Not every new company or product makes it, but many successful startups share the following characteristics.
    Entrepreneurship

    6 Characteristics Of Successful Apps

    Not every new company or product makes it, but many successful startups share the following characteristics.
  7. When it comes to managing finances and tracking the markets on the go, there are a number of excellent apps that can be downloaded and installed onto your mobile device.
    Entrepreneurship

    Top Stock Market Apps For News Or Trading Or Both!

    When it comes to managing finances and tracking the markets on the go, there are a number of excellent apps that can be downloaded and installed onto your mobile device.
  8. A brief overview of the top apps that help forex traders with on time information, charts and more.
    Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.
  9. As technology has evolved, the landscape of the music industry has changed from radio broadcasts to mp3 and now streaming services.
    Entrepreneurship

    Will Pandora And Spotify Disrupt Music Royalties?

    As technology has evolved, the landscape of the music industry has changed from radio broadcasts to mp3 and now streaming services.
  10. Retirement

    Know The Cost of Living Where You Plan To Retire

    When considering where to live after retiring, it's important to keep in mind the type of taxes that would have to be paid at each retirement location.

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center