A competitor cut the price on Friday at 17:00. You notice it on Monday morning. In the meantime some customers have already left. By then it is late to react, or at least significantly more expensive.
Reacting fast requires automated alerts. But it is just as important to know how to react. Not every price change calls for a response.
Step 1: Get the alert
The first condition is an alert. Without automated competitor price monitoring you always react late.
You get the alert when the next update detects the change. The alert includes:
- Which product, which competitor
- The old and new price, and the size of the change
- Your current position after the change
Step 2: Analyse the change before reacting
Not every price change calls for a response. Before deciding, ask three questions:
Is it temporary or permanent?
Campaign prices usually last 3–14 days. If a competitor cut the price drastically over one weekend, it is probably a campaign, not a new permanent price. Price history shows whether this pattern is familiar.
How big is the price gap?
If a competitor is 50 cents cheaper on a 50-euro product, that is a 1% difference. Most buyers do not switch shops over it. If the difference is 5 euros, that is already 10% and needs attention.
What is your position across the whole category?
One competitor cut the price. But where do you stand relative to the rest? If you are still in position 2 of five, the situation is different from dropping to position 5.
Step 3: Decide how to respond
You have three options:
Cut the price
Reasonable if the price gap is significant, the change looks permanent and your margin allows it. Just be careful of a price war. If both sides keep cutting, both lose.
Hold the price, accept the loss of position
Reasonable if the change is temporary, the price gap is small, the product is margin-critical or you differentiate in other ways (fast delivery, extra warranty, and so on).
Watch and decide later
Reasonable if you are unsure. Watch your sales figures and position over the next 3–5 days. If sales drop significantly, that is a clearer signal.
How to react faster
The best reaction is fast and contextual. It requires:
- An alert after every price read, several times a day (not only a morning summary)
- Price history that shows whether the change is normal behaviour for that competitor
- A view of your market position after the change, showing where you stand now
All three are built into e-shop price monitoring.
If you want to set up automated alerts for your shop, try it free.
Read on: competitor price monitoring · how to know if your prices are competitive
Frequently asked questions
Get an automatic alert when the system detects a significant price change. You do not have to check yourself.
No. Before reacting, look at: how big the price gap is, whether it is a temporary campaign or a permanent change, what your margin is and what your position is relative to the rest of the competitors.
A price war is a situation where two shops keep cutting prices against each other until both lose margin. Avoid it by looking at the context of the change: whether the competitor cut the price only on this product or across the whole category, temporarily or permanently.
It depends on the category. Electronics is often reacted to within an hour, fashion within a day. Fast reaction requires automated alerts. With manual checking you always react late.