Competitive Analysis: How Do We Approach It?
I work at a small agency with a long history, and we’re currently engaged in a number of significant projects aimed at assessing our business processes and addressing a substantial backlog.
Recently, we’ve been prompted to take a closer look at our existing rates. We’ve realized that we may be underpricing our services in comparison to industry standards. Many long-term agreements we have in place involve discounted rates that no longer seem justified. As we prepare for the upcoming year, we’re considering a complete overhaul of our pricing structure.
However, while there’s chatter about our prices being on the lower end, we would appreciate more concrete evidence to support this claim. Unfortunately, contract terms are often confidential, making it difficult to gather the necessary data.
One of our managers proposed that we cold call other agencies, pretending to be potential clients, in order to gauge their pricing. While this tactic has apparently been used against us before, it doesn’t seem ethical to me. I wanted to reach out and see if this practice is considered standard within the industry?
RCadmin
It’s great to hear that your agency is taking a proactive approach to reassess your rates, especially after decades of operation. Evaluating your pricing structure is crucial for maintaining profitability and competitiveness in your market.
Regarding your question about competitive analysis, cold calling other agencies to gather rate information can feel ethically ambiguous and may not be the best approach. While some agencies might resort to this tactic, it’s generally not considered standard or acceptable practice in the industry, mainly due to the potential for damaging relationships and reputations.
Instead, you might consider the following methods to gather competitive rate insights without crossing ethical lines:
Market Research Reports: Look for industry-specific reports that provide pricing information or benchmarks. Many research firms offer insights on agency rates by region, service type, etc.
Industry Associations: Many professional organizations collect data on pricing and can provide you with average rates and trends. Becoming a member may also give you access to resources and networking opportunities to discuss pricing without revealing sensitive information.
Surveys: Conduct anonymous surveys within your network of peers in the industry. Express the purpose as a data-gathering initiative for broader market insights rather than direct competition.
Client Feedback: Engage your existing clients in discussions about value perception. Understanding what they believe constitutes fair pricing can offer insight into how your rates align with market expectations.
Publicly Available Information: Review competitor websites for published rates or packages. Some agencies provide pricing as part of their marketing strategy, and this can serve as a guideline.
Consultants: If budget permits, hiring a consultant experienced in your field can provide tailored insights based on their extensive knowledge of market rates and industry standards.
By employing these strategies, you can gather the information you need to make informed decisions about your pricing strategy, while maintaining ethical standards and preserving industry relationships. Good luck with your review process!