Pricing
How to use market data to make pricing decisions
Knowing your competitors' prices does not tell you what to do with yours. Between matching everything and changing nothing, there is a method: give each product a role, set rules, and check your own price list before anyone else's.
Key points
- Measure your position by product family before looking at products one by one.
- Give each product a role: traffic builder, core range, margin product. The rules follow from it.
- Your own price list often holds more costly mistakes than the gap with your competitors.
- Promotions are regulated: in the EU, an announced reduction is calculated on the lowest price of the previous 30 days; the UK and the US have their own rules.
Why pricing deserves a method
Price moves margin faster than any other lever. In Marn and Rosiello's study, a 1% price increase improved operating profit by 11.1% on average, against 3.3% for a 1% increase in volume[1]. The reverse holds too: a price cut decided without method goes straight to the bottom line.
Market data helps you decide with less uncertainty. It does not decide for you.
1. Measure your position by family
Start with an overview: for each family (corner sofas, sofa beds, armchairs, tables, garden lounge sets), where do your prices sit compared with the competitors that matter? Two indicators are often enough:
- the median gap between your prices and those of your equivalents;
- the share of products that are cheaper elsewhere, aligned or better placed.
A whole family above the market raises a positioning question. A few isolated products above the market raise a product-by-product pricing question. The answers are not the same.
2. Give each product a role
Not all products are managed the same way.
| Role | Example | Typical rule |
|---|---|---|
| Traffic builder | The most searched three-seater sofa | Stay at the level of the cheapest credible offer |
| Core range | Fast-moving best sellers | Limited gap to the market, reviewed weekly |
| Margin product | Exclusive or well-equipped models | Hold the price, justified by the specifications |
The role also tells you when to do nothing: an exclusive product with no direct equivalent does not need to follow a market that does not exist.
3. Write reaction rules
A written rule avoids deciding under the pressure of an alert. For each family or tracked product, set:
- the threshold from which you react, for instance a 5% gap with the cheapest;
- the reaction: match, stay a little above, or push another selling point;
- the floor, never to be crossed;
- the delay: a forty-eight-hour promotion does not justify a lasting cut.
Compare delivered prices rather than displayed prices: on bulky furniture, delivery fees often change the ranking.
4. Check your own price list
This is often where the most costly gaps hide. A price list ages: products added collection after collection, prices adjusted one by one, forgotten promotions. Three inconsistencies come up often:
- a product priced above a better-equipped model from your own range, such as a fixed sofa above a sofa bed of the same size;
- two nearly identical products with a price gap nothing in the product pages explains;
- a gap in the range, where no product covers a price band in which the market sells a lot.
A customer comparing two of your product pages sees these inconsistencies before you do. They can be fixed without looking at a single competitor.
5. Respect the rules on promotions
Adjusting a price is not the same as announcing a reduction. As soon as a strikethrough price, a percentage or the word “sale” appears, specific rules apply.
- In the European Union, the announcement must show the prior price, meaning the lowest price applied during a period of at least 30 days before the reduction[2]. The Court of Justice ruled in 2024 that the percentage shown must be calculated on that prior price, not on the last price charged[3].
- In the United Kingdom, the Competition and Markets Authority's guidance on unfair commercial practices under the Digital Markets, Competition and Consumers Act 2024 covers misleading price claims, including reference prices[4].
- In the United States, the Federal Trade Commission's Guides Against Deceptive Pricing state that a former price used for comparison should be one at which the item was actually offered, in good faith, for a reasonably substantial period[5].
In practice, cutting a price to stay competitive and then announcing a promotion a few days later requires keeping careful track of your own price history.
6. Measure the effect of decisions
Every price change is an experiment. Record the date, the old and new price, and compare sales and margin over the following weeks, taking the season into account. Over time, you will learn which families respond to price and which ones sell on something else.
Sources
- Michael V. Marn and Robert L. Rosiello, Harvard Business Review, “Managing Price, Gaining Profit”, September-October 1992. hbr.org/1992/09/managing-price-gaining-profit
- EUR-Lex, “Directive (EU) 2019/2161 of 27 November 2019, Article 2 (Article 6a of Directive 98/6/EC)”, December 18, 2019. eur-lex.europa.eu/eli/dir/2019/2161/oj
- Court of Justice of the European Union, press release, “A price reduction announced in an advertisement must be calculated on the basis of the lowest price of the last 30 days (Case C-330/23, Aldi Süd)”, September 26, 2024. curia.europa.eu/jcms/upload/docs/application/pdf/2024-09/cp240152en.pdf
- Competition and Markets Authority, GOV.UK, “Unfair commercial practices (CMA207)”, updated November 18, 2025. www.gov.uk/government/publications/unfair-commercial-practices-cma207
- Legal Information Institute, Cornell Law School, “16 CFR Part 233, Guides Against Deceptive Pricing”. www.law.cornell.edu/cfr/text/16/part-233
