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9 Types of Price Competition

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Price competition is the process of setting competitive prices to achieve objectives in a market. All firms, brands, products and services need to set prices that are attractive to their target market relative to the competition. The following are common types of price competition.


When a firm sells a product in a foreign market cheaper than the normal price to try to put competitors in that nation out of business.

Predatory Pricing

Setting a price abnormally low to put a competitor out of business or discourage potential competitors from entering your market. A dubious strategy that is considered anti-competitive behavior that is prohibited by law in many jurisdictions.

Loss Leader

A shop or ecommerce site that sells a number of items cheaply to attract customers in the hopes they buy full price items when they visit or in the future.

Market Penetration

A low price for a new brand or product that is seeking to gain their first customers and establish brand awareness.

Inventory Clearance

Prices designed to clear inventory that is unpopular or soon to be out of season.

Product Positioning

A product that isn't seen as high quality by customers may have no other way to position their product than by offering the lowest price.

Umbrella Price

A price set by a high quality product or service that has strong customer demand. Weaker competitors need to set prices below the umbrella price or demand for their product will fall towards zero.


Commodity prices are set by the supply and demand in a market. Individual firms have little or no influence over prices and must accept the market price to sell.

Premium Pricing

Brands, products and services that are viewed as high quality by customers. Implies a firm that has discipline in pricing such that they don't lower prices for a quick short term gain but are interested in maintaining their premium image. Premium pricing is still competitive. For example, a luxury hotel might need to beat the price of a nearby competitor that is viewed as more luxurious.
Overview: Price Competition
The process of setting competitive prices to achieve objectives in a market.
Related Concepts


This is the complete list of articles we have written about pricing.
Algorithmic Pricing
Bargaining Power
Benchmark Price
Price Fixing
Cost-plus Pricing
Price Gouging
Customary Pricing
Decoy Effect
Everyday Low Price
Marginal Utility
Willingness To Pay
Dynamic Pricing
High-Low Pricing
Market Value
Flat Pricing
Loss Leader
Predatory Pricing
Price Discrimination
Snob Effect
Market Price
Price Competition
Price Leadership
Premium Pricing
Price Economics
Price War
Revenue Management
Veblen Goods
Price Floor
Price Promotion
Price Sensitivity
Price Skimming
Price Umbrella
Pricing Power
Pricing Strategy
Sticky Prices
Value For Money
More ...
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The common types of pricing.


The definition of supply with examples.


The common types of shrinkflation.


The five common definitions of value with an example.

Value vs Price

The difference between value and price with examples.


The common types of price.

Price Signal

The definition of price signal marketing with examples.

À La Carte

The definition of à la carte with examples.

Cost vs Price

The key differences between cost and price explained with a comparison table.

Price Economics

A list of price economics principles and theories.

Willingness To Pay

A list of factors that influence willingness to pay.

Sticky Prices

Prices that stick to an established range and resist changing economic forces such as inflation.


A definition of commoditization with examples.

Too Cheap To Meter

A definition of too cheap to meter with examples.

Relative Price

The definition of relative price with examples.

Market Value

The definition of market value with examples.

Competitive Market

A complete overview of competitive markets with examples.
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