When to ignore a competitor’s price rise

When a competitor raises their prices you have two choices. You can respond by raising your prices as discussed here, or you can choose to ignore the raise and maintain your current prices.

You should consider ignoring the price rise in the following situations;





Costs are falling


If there is no financial pressure because costs have remained the same you have the option of maintaining your current prices and gaining customers who don’t want to pay the increased prices of your competitor.



Excess supply


If you have excess capacity or surplus product to shift you should ignore the price rise and focus on attracting some of your competitor’s business.



Customers are price sensitive


If your customers would resist a price increase and you don’t want to drive customers away then maintain your current prices.



‘Value’ brand image


If your brand is positioned as ‘affordable’ or a cheaper alternative then you may consider keeping prices low to fit with your brand positioning.



Business growth


If you are trying to grow your customer base you should maintain current prices in an effort to attract new business.

Should you decide to follow your competitors and raise your prices then one other consideration is how fast you should move.

Move quickly if you want it to be clear your prices are rising in relation to industry wide rises. You should also respond quickly if you want to maintain profit margins. Raise prices slowly if you want to maintain customer loyalty.

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