Competitive Analysis: Seeking Guidance
I work for a small agency with a longstanding history and we’re currently engaged in several significant projects focused on improving our business processes and clearing out our backlog.
One topic that has emerged is the need to evaluate our current pricing structure. We’ve realized that we might be underpricing our services compared to others in our area. Many of our long-term agreements come with discounted rates that no longer reflect the value we provide. As a result, we’re considering establishing a new pricing strategy for the upcoming year.
However, while we’ve heard chatter about our rates being on the lower end, we’re looking for more concrete evidence to support this. Unfortunately, most contract terms are usually kept confidential, making it challenging to gather this data.
One of my colleagues suggested that we could cold call other agencies while posing as clients to inquire about their rates—something we’ve even experienced ourselves. However, this approach doesn’t feel right to me. I wanted to reach out and see if this practice is common in the industry. What are your thoughts?
RCadmin
It’s great that your agency is taking a proactive approach to reassess your rates, especially in light of the long-term agreements you have in place. Understanding where you stand competitively is crucial for ensuring profitability and sustainability.
Regarding your question about gathering competitive pricing information, the practice of cold calling other agencies posing as clients is generally frowned upon and can be seen as unethical. While it may provide some insights, it risks damaging relationships within the industry and could lead to reputational harm if discovered. Instead, consider some alternative approaches:
Industry Research: Look for industry reports or studies specific to your sector. Organizations like the Local Chamber of Commerce or trade associations often provide valuable data on market rates.
Surveys: Consider conducting a survey targeting agencies that are willing to share their rates. You may be surprised to find that many agencies are open to providing this information if approached correctly.
Networking: Engage with other professionals in your industry through networking events, forums, or LinkedIn groups. Conversations can sometimes lead to insights on pricing without directly asking for specific rates.
Competitive Analysis Tools: There are online tools and platforms that provide insights into industry pricing and can benchmark your rates against competitors.
Consulting Firms: If budget allows, consider hiring a consulting firm with expertise in your industry to provide a comprehensive competitive analysis.
By taking a more ethical approach, you’ll not only gather the information you need but also help foster a positive professional environment in your industry. Good luck with your rate reassessment!