Competition-based pricing

Competition-based pricing:

This approach focuses on the prices charged by other firms in the same industry or market. Competition-based pricing does not always imply charging the identical rate others charge but rather using others prices as an anchor for the firm’s price. This approach is used predominantly in two situations:

(a)       When services are standard across providers, such as in the dry    cleaning industry.

(b)       In oligopolies where there are a few large service providers, such as in the airline.