Two Approaches to Price Tracking
Retailers often get pricing wrong. This is partly explained by the inherent complexity of pricing products in multi-seller markets where everyone has different information. A price that looks right to you might be completely out of touch with the rest of the market.
In our day and age, however, shoppers, ever connected to online tools for discovering products, are likely to go where products cost less. According to TalkBusiness, pricing too high can cause your brand to lose sales because customers come to dismiss your store as being “too expensive.”
This is why you need some kind of price tracking solution.
Price Tracking the Manual Way
Price tracking, also called “price intelligence,” is a practice of gathering the complete range of prices in the market for products that you sell. At its most basic, it can be accomplished with a manual process. This is called “manual price tracking.”
Automating the Process
A more sophisticated approach to price tracking makes use of software and computer applications that eliminate the grunt work.
The subtle differences and tradeoffs between the manual and automated approaches to price tracking are not always clear, however. To someone who has not used an automated solution, it might not even cross the mind that this whole process can be automated.
To help you make this decision for yourself, we compare these two types of price tracking below.
How Manual Price Tracking Works
A typical manual price tracking system grows out of the retailer’s realization that he or she needs to track prices. For example, a retailer with a good local market encounters new competition in the form of a new store opening across the street. However, the new store might be focused differently so there is no real need for alarm.
With time, perhaps, the new store starts selling a product that the old retailer alone supplied. Now the old retailer realizes they must monitor the other retailer’s prices for the product they have in common, otherwise all the customers defect.
Characteristics of a Manual Tracking System
As you can see, because manual price tracking systems originate out of informal, spur-of-the-moment decisions, they tend to be very basic.
Such systems, at best, might make use of a spreadsheet on a computer to store the data. The frequency with which the information is updated tends to be low. The retailer might take an occasional shopping trip to the competitors’ store to find out or spy on the level of prices.
Potential Issues With This Price Tracking Approach
As long as the number of products to be tracked is very small, there will be no issues. However, the moment more products need tracking, problems arise. For one, updating prices manually becomes a hassle once a few dozen products are involved.
In addition, once more than a couple of retailers are competing in the same market, gathering data for all of them requires more time.
Even more, keeping the data accurate and up to date becomes more challenging. Competitors change their prices all the time. This creates additional wasted time for the retailer trying to keep a price spreadsheet updated.
How Automated Price Tracking Works
Most product selling markets are in fact much more complex and competitive than in our example above. Instead of dozens of prices to track and a handful of competitors, there might be hundreds, thousands, or more of these.
Features of an Automated Price Tracking System
Retailers operating in competitive markets realize that tracking prices manually can be too time-consuming. As a result, they might sign up for an automated price tracking solution right out of the gate.
Automated price tracking systems typically share these essential features:
- Professionally-developed software that is secure and keeps your data private
- Can track prices for an unlimited number of products
- Can keep track of hundreds and potentially thousands of competitors
Common Misconceptions About This Tracking Approach
Many retailers might be hesitant to consider this automated tracking approach due to a lack of experience with the available tools. This is totally understandable.
However, sometimes retailers think that tracking prices with spreadsheets can replicate what they would get with an automated tool. This is only partially true. Spreadsheets, however, can get hopelessly out of date or the data may get corrupted.
With an automated approach, you can cut down significantly on the time it takes to maintain your competitor price data.
Which Price Tracking Approach is Better?
Any rational retailer would want a price tracking solution that eliminates hassles and saves them time. To arrive at your final selection of a price tracking system, we suggest the following criteria for the decision.
The Criteria
Retailers are strapped for time and many need to cut costs. These are important priorities to keep in mind when selecting your price tracking solution. In addition, you will want to spot opportunities for growth. A reasonable summary of the criteria for selecting a price tracking solution looks as follows:
- Time - Requires the least time to run and maintain
- Cost - Reduces my costs, both upfront and maintenance costs
- Growth - Helps my business grow by finding new opportunities in the market
Your Decision: Which Solution Wins?
If you’ve been keeping score as we summarized above, you might have a final scorecard like below:
- Time - Automated wins, because it simply takes far less time to track using a powerful price tracking software.
- Cost - Split between manual and automated. A manual solution can be cobbled together for zero cost. The maintenance costs of an automated solution are lower, however, because you spend less hours fiddling with spreadsheets.
- Growth - Automated wins. An automated solution can show you new products your competitors are selling that you don’t stock. You can then stock these yourself to reach new customers.
Unless you are running a very niche retail store in a very small area, the scorecard suggests you will do better with automated price tracking in the long run.
Your First Steps to Automating Price Tracking
If you have been relying on a manual price tracking system, you could save a lot of time by using Competitor Monitor’s automated solution. We are one of the leaders in this space, and our product is popular with retailers. These are just some of the verticals that rely on our product for tracking their competitors to gain a pricing edge:
Our solution comes with some unique advantages you won’t see in others’ offerings. For example, we can track your online reviews along with the price data. This way you can make sure potential buyers see your brand at its best. To get started or get a beginners’ tutorial, simply sign up on our Demo signup.
