Did you realize that pinpointing your rivals affects competitive pricing? Right away you can think of competitors you know, but it is not a sure bet that they are the ones who spoil your strategy. Some wrong definition threatens to develop an ineffective strategy, which will only bring you a ton of expenses and reduced sales.

The estimation of the price index will permit you to comprehend who your true rival is. By following a straightforward methodology, you will know who you want to watch out for and what shortcomings they bring to you.


Identification of direct competitors

The estimation of the price index allows you to understand who your direct competitors are with comparative prices for certain types of goods in the certain location where you operate over a set period of time.

On the Internet, you can track down a colossal wide range of complicated equations that can just befuddle you and lead to huge misfortunes. Today we will enlighten you regarding the best technique for computing the price index, which you can use sooner rather than later and limit costs, just as the assets of your workers.

The most appropriate time for ascertaining the price index is the last days of the time frame you have picked. Toward the finish of the period, you get a full vision and on the off chance that you see that sales and profits have diminished throughout this timeframe, then, at that point, you normally need to know why this occurred. The price index is straightforwardly identified with the measure of products sold. In such a manner, you will actually want to get exhaustive data utilizing the historical backdrop of deals and set costs.



  • In the beginning, before you start making the necessary calculations, you have to gather data about what items both you and your rivals share. From that point onward, it is important to analyze the prices that were set for the given timeframe.
  • Then, you can work out the price index for every item you are interested in from every one of your rivals. When calculating, take the price at which the product was sold from your competitor and divide it by the price at which the product was sold from you. After that, multiply it by one hundred percent.
  • By performing such calculations for each item of goods, you can discover what the prices set by your rivals meant for your sales.
  • To track down the normal estimation of the price index for a specific item, it is obligatory to add up all the values ​​obtained for each rival and divide by the total number of your competitors.
  • Thus, you are about to discover how, in total, all participants influence the number of items you sell. Sum each average value that you got previously and divide by the number of items per particular rival.
  • It would be convenient to graph and display all values ​​obtained. This way you can find all the inconsistencies.

Using such methods, you can add your sales indicators and understand which participants are negatively affecting your profit.


  • Assuming you have a small number of items in your inventory, then you can make such a calculation manually. If you have a large number of products, then it is best to automate the workflow and not waste time.

How to gather information to accurately estimate the price index

Follow the steps below to make a more accurate prediction:

  • Monitor your rivals’ prices and stock consistently

This approach will guarantee a more accurate result. Otherwise, probably you make an outdated calculation, which will affect the development of a meaningless pricing strategy.

If you have a small number of products, then check this information every day. If you have a large number of products, then monitor prices several times a day.

  • Create a single table and store all information there
  • To minimize time, use ready-made formulas in the table from earlier calculations
  • Display your results in graphs and charts. Looking at the numbers, it is difficult to grasp different points and subtleties. To do this, transfer the obtained calculations to the graphs.
  • Write down your sales indicators for the selected period of time. Simply calculating the price index will only show you market data, but will not show you the impact on your sales specifically.
  • Correlate your decline in sales with the growth in sales of competitors and determine who made an impact.

Possible problems

Certainly, in words, everything is easy. However, in fact, everyone will understand that this requires a lot of effort and concentration.

The first difficulty that managers face is that they collect low-quality data that lead to incorrect calculations. Often, prices are used that are shown on marketplaces, rather than on the official web pages of stores. Alternatively, traders create parsers that may also incorrectly indicate prices. Collect data only from primary sources to make accurate calculations.

The next problem concerns manual data processing. Employees of your company may not always be competent in processing and analyzing information. The best option would be to hire a team dedicated to competitor price monitoring. Such specialists know how, when and what to do. In the shortest possible time, all data, information about promotional offers, the amount of stock, and presentable appearance will be collected.



High-quality, complete and up-to-date information is the key to successfully implementing a pricing strategy that will allow companies to understand what is wrong with their prices and why sales are falling.

Searching for new calculation solutions and accurately identifying competitors will allow sellers to quickly respond to negative changes and amend pricing policies as soon as possible. Many companies are already introducing various digital technologies into their workflows, which will quickly and accurately identify shortcomings.

While implementing the newest technologies pay close attention to collecting more accurate data and making a comprehensive overview of your competitors’ marketing policies.