What is price analysis and why is it important?

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What is price analysis and why is it important?

24/09/2021

Profile picture for user Maria Jose Guerrero

Maria Jose Guerrero

Price analysis is the study of the prices of products and services on the market to improve the profitability of e-commerce itself. It allows to know and understand how prices affect the growth of certain businesses and its influence on the sales volume. From this knowledge, companies can apply appropriate price optimization to increase their profits. Price analysis can be carried out with an automated pricing tool that collects the data of greatest interest to the company. We explain its benefits and what you should consider when performing price analysis. 

As a starting point, you should know that price analysis can be applied both routinely, to evaluate the profitability of your pricing strategy periodically, and at certain key moments for e-commerce. Among these moments are the evaluation of new product ideas, the launch of new products and services, or the adjustment of the positioning strategy of a product against those of the competition.

Benefits of price analysis for e-commerce. 

In addition to driving e-commerce towards greater profitability, price analysis brings the following benefits to online stores: 

Better customer insight

Metrics for understanding price effectiveness and profitability also reveal important information about customers and how they respond to the value of products and services. Studying them can provide information, for example, about the elasticity of demand in your market. It allows you at the same time to improve your target segmentation. 

Identifying new business opportunities

Obtaining quality information on market prices also allows e-commerce companies to identify new ways of attracting customers through optimal pricing strategies. In turn, pricing analysis helps to detect which sales channels are more profitable and therefore more likely to receive greater investment in the medium and long term.

What to include in your price analysis? 

The price analysis should first include data about the prices and demand of e-commerce itself. To these, you should add a study of market prices and competitors' prices. Monitoring competitors' prices is essential to offer customers attractive prices. Based on them, and according to the characteristics of your products, you can opt for a competitive pricing strategy, high or low.

This study of your prices and those of your competitors should also include historical prices. If you know the evolution of prices over a certain period, you will be able to anticipate changes in the market and competitors' movements and thus achieve greater profitability. This is what is known as predictive price analysis.

Overall, the conclusions obtained from the price analysis led to e-commerce optimization. This reinforces the premise that price is one of the factors that most influences users' purchasing decisions, along with value for money and e-commerce transparency. Therefore, to improve your pricing strategy and promote the growth of your business, you can rely on a pricing team to advise you and provide you with automated tools to speed up decision-making. 

Find out how Minderest can take your business to the next level.

Contact our pricing experts to see the platform in action.

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