SBA Business Plan Workbook
U.S. SMALL BUSINESS ADMINISTRATION
4. What have you learned from their operations? from their advertising?
5. What are their strengths and weaknesses?
6. How does their product or service differ from yours?
Start a file on each of your competitors. Keep manila envelopes of their advertising and
promotional materials and their pricing strategy techniques. Review these files periodically,
determining when and how often they advertise, sponsor promotions and offer sales. Study
the copy used in the advertising and promotional materials, and their sales strategy. For
example, is their copy short? descriptive? catchy? or how much do they reduce prices for
sales? Using this technique can help you to understand your competitors better and how
they operate their businesses.
2. Pricing and Sales
Your pricing strategy is another marketing technique you can use to improve your overall
competitiveness. Get a feel for the pricing strategy your competitors are using. That way you
can determine if your prices are in line with competitors in your market area and if they are
in line with industry averages.
Some of the pricing strategies are:
• retail cost and pricing
• competitive position
• pricing below competition
• pricing above competition
• price lining
• multiple pricing
• service costs and pricing (for service businesses only)
- service components
- material costs
- labor costs
- overhead costs
The key to success is to have a well-planned strategy, to establish your policies and to
constantly monitor prices and operating costs to ensure profits. Even in a franchise where
the franchisor provides operational procedures and materials, it is a good policy to keep
abreast of the changes in the marketplace because these changes can affect your
competitiveness and profit margins.
Appendix 1 contains a sample Price/Quality Matrix, review it for ideas on pricing strategies
for your competitors. Determine which of the strategies they use, if it is effective and why it is
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