Pricing: key strategies and the impact of price monitoring Author: PriceCop Thursday June 12th, 2025 • Category: Blog • Updated: Thursday June 12th, 2025 “Pricing is the art of managing the perception of value, not just setting numbers.” — Hermann Simon, strategic management expert, author of “Price Management for Profit” Proper pricing is the foundation of a business’s profitability. It affects demand, competitiveness, and brand perception. Depending on the strategy, the price can be based on costs, competitor prices, or consumer perception. Let’s explore the main pricing methods and examine how price monitoring helps make optimal decisions. Contents Cost-based pricing Competitive pricing Skimming strategy Market penetration strategy Premium pricing Loss leader strategy Bundle pricing Predatory pricing Dynamic pricing Value-based pricing How does price monitoring help in pricing? Pricing for stores on the Horoshop platform Conclusion 1. Cost-based pricing This is one of the simplest and most widely used methods. The price is calculated using the formula: Cost + Markup = Selling Price Cost-based pricing methods Full cost method – includes all expenses, including production, rent, salaries, and marketing. Variable cost method – considers only the costs directly related to producing a specific unit. Target profit pricing – the price is set with a desired profit level in mind. This method is convenient but does not consider market dynamics. In cases of demand shifts or competitor activity, a fixed markup can result in lost clients or missed profits. 2. Competitive pricing Companies analyze the market and set prices based on competitors. This method is especially relevant in highly competitive niches such as e-commerce and retail. Types of competitive pricing Market-level pricing – matches the average market price. Below competitor pricing – helps attract new customers but can lower profits. Above competitor pricing – justified if the product has unique advantages. This method requires constant competitor price monitoring and a flexible pricing policy. How does PriceCop help with competitive pricing? Using competitor price reports allows online stores and suppliers to adapt their prices in a timely manner. PriceCop gathers competitor data, generates detailed reports, and helps identify optimal pricing without manual tracking. Avoid price wars by adjusting based on real market conditions. Identify products competitors sell cheaper and offer better terms. Analyze pricing trends and optimize product assortment. 3. Skimming strategy Used when launching a new or innovative product. The initial price is high, then gradually decreases as the market becomes saturated. Example: Apple launches a new iPhone at a premium price for early adopters, then lowers the price or offers budget models. Pros: – High profits from early buyers. – Emphasizes exclusivity. Cons: – High prices limit mass demand. – Competitors may offer similar products at lower prices. 4. Market penetration strategy The opposite of skimming: a low initial price to gain market share, then gradual increases. Example: New online services like Netflix or Spotify offer low introductory prices, then raise their rates. Pros: – Rapid customer acquisition. – Sustainable competitive advantage. Cons: – Low initial profits. – Risk of price wars. 5. Premium pricing Used to position a product as exclusive. A high price emphasizes status and quality. Example: Rolex watches or Tesla cars have high prices backed by brand strength and unique features. Pros: – Enhances brand image. – High profit margins. Cons: – Limited customer base. – High dependency on reputation. 6. Loss leader strategy The product is sold at minimal or even below-cost price to attract customers and boost sales of other goods. Example: Game consoles (Sony PlayStation, Xbox) are sold at near cost, but profits come from games and subscriptions. Pros: – Attracts new customers. – Encourages additional purchases. Cons: – Risk of loss if there are no follow-up sales. – Requires significant investment. 7. Bundle pricing Combining several products into a single package with a total price. Example: McDonald’s offers meal combos that are cheaper than ordering items separately. Pros: – Increases average order value. – Helps sell hard-to-move inventory. Cons: – May not always appeal to customers. – Can reduce the perceived value of individual items. 8. Predatory pricing Companies deliberately set extremely low prices to force competitors out of the market. Once competitors withdraw, prices are raised. Example: Amazon uses aggressive discounting to dominate in e-commerce. Pros: – Eliminates competition. – Helps gain market leadership. Cons: – High risk of losses. – Prohibited in some countries. 9. Dynamic pricing The price changes in real time depending on demand, competition, seasonality, and other factors. Example: Airline tickets and hotel rates increase during periods of high demand. Pros: – Maximizes profit. – Flexible pricing adjustments. Cons: – Requires automation. – May cause negative customer perception. How does API-based pricing work via PriceCop? PriceCop integrates with pricing management systems via API, automatically updating competitor price data. Businesses can set pricing rules: e.g., always be 5% cheaper than the main competitor or maintain a minimum profit margin. Competitor price changes automatically influence your strategy, enabling instant adaptation. Example: An electronics e-store uses PriceCop API to dynamically adjust prices based on competitor offers. When a competitor lowers the price on a popular smartphone, the system automatically adjusts the price to remain competitive. 10. Value-based pricing The price is determined not by cost but by how much a customer is willing to pay. Example: Software subscriptions, where the price reflects business value (e.g., Adobe Photoshop). Pros: – High profit margins. – Focused on customer needs. Cons: – Difficult to assess perceived value. – Requires market research. How does price monitoring help in pricing? The modern market demands flexible pricing. Continuous competitor and trend analysis allows timely price adjustments and staying competitive. What does price monitoring provide? Up-to-date competitor price data. Ability to forecast market changes. Automation of dynamic pricing. Real-time optimization of pricing strategies. API-based price monitoring enables companies to integrate competitor data into their systems and automatically adjust prices using algorithms. Example: Online stores use APIs to synchronize prices with competitors and always offer the best possible conditions. Pricing for stores on the Horoshop platform The Horoshop platform is popular among online stores in Ukraine. Store owners on this platform can connect PriceCop for automatic price monitoring and adjustments. How does it work? API sync with Horoshop automates price updates. Stores can set individual rules – for example, automatically reduce the price if a competitor offers a lower one. Receive reports on market price dynamics and adjust strategies accordingly. Conclusion Pricing is not just a formula but a strategy that affects sales and profits. Depending on business goals, different approaches can be used: from competitive pricing to dynamic models. However, any strategy is effective only when based on market data. Want to automate price monitoring and boost business profitability? Try PriceCop — a service that collects and analyzes competitor data, helping to make informed pricing decisions. Request a free demo and see how effective price monitoring can be!