4 competitive pricing examples, mistakes, and strategies to grow

Competitive pricing is a fast way to win early deals and stay visible in crowded markets. Here, we focus on competitive pricing examples so that you can borrow what works and skip what does not.

Learn from these 4 competitive pricing examples

These competitive pricingexamples show how challengers used price to stand out without becoming the cheapest option in the market.

Freshdesk vs. Zendesk: Lower entry price for small teams

Freshdesk entered the helpdesk market, where Zendesk was the better-known tool. Freshdesk offers a free plan and lower-priced paid plans, while Zendesk focuses on higher-priced paid tiers.

Lesson: This competition-based pricing example shows how a lower entry price for small teams can win budget-sensitive customers.

Cloudflare vs. Legacy CDNs: Free plan to reset expectations

Cloudflare offers a free plan that includes CDN, SSL, and basic DDoS protection. Many traditional CDN providers charge monthly fees for similar core features, often with stricter limits.

Lesson: Here, price competition works by making a strong free tier, then charging for advanced limits, which changes what buyers expect to pay.

Canva and Affinity vs. Adobe: Freemium vs. Full suite subscription

Canva offers a free plan and a low-cost Pro tier, while Adobe Creative Cloud maintains higher subscription prices for its full suite. After buying Affinity, Canva relaunched it as a creative app that is free to use in many cases.

Lesson: This competitor-based pricing example shows how freemium models can attract users who see Adobe as too complex or expensive.

Dollar Shave Club vs. Gillette: Cheaper subscription for blades

Dollar Shave Club sold razor cartridges on a simple subscription with a clear monthly price. Gillette relied on higher-priced cartridges in retail stores and later on its own subscription offer.

Lesson: This competitive pricing strategy example pairs a lower per-month cost with a simpler way to buy, and not just a smaller shelf price.

Together, these examples of competitive pricing show that startups study rival prices, then change structure with free tiers, bundles, or subscriptions instead of copying one number.

Competitive pricing strategies for startups

Competitive pricing is not one play. It is a set of moves you pick based on your costs, your product, and how crowded the market is. These competitive pricing strategyexamples show the main options.

Price matching to lower the risk for buyers

Price matching means you set a similar price to key rivals, then win on value, service, or terms. It keeps you in the same “price band” that buyers already expect.

A competition pricing tool is a SaaS tool that matches per-seat price but offers longer trials and easier upgrades. The number stays familiar, the offer feels safer.

Use this when your product is close to rivals but smoother to try or adopt. You avoid a race to the bottom, yet still compete in buyers’ shortlists.

Strategic undercutting to enter the market

Undercutting means you price below rivals on purpose, usually on your entry tier. This is classic price competition, but it should be controlled and not random.

A competitive pricing strategy example is a startup that launches a light plan at half the market rate, with strict limits and paid add-ons for power users.

Use this when you need fast entry and have room in your margins. Set clear guardrails on discounts and upgrade paths so you do not get stuck with cheap, heavy users.

Premium pricing at or above the market

Sometimes the right move is to be more expensive, not cheaper. You anchor against competitor prices, then go higher with a clearer promise.

A competitor-based pricing example here is a niche analytics tool that charges more than general BI tools but includes setup and support in one fixed fee.

Use premium positioning when you solve a sharp problem, serve a niche segment, or replace services. The higher price must match clear outcomes.

Dynamic and adjustable pricing

Dynamic pricing means you adjust prices or discounts based on usage, segment, or time. This is still competition-oriented pricing, but more flexible.

A competition-based pricing example is a dev tools startup that keeps public tiers close to rivals but runs time-bound credits or volume discounts for trial users.

Use this when demand or usage is uneven. Set simple rules: when to offer credits, when to raise prices, and when to hold firm so you do not train buyers to wait.

Starter tactics to try

• Start with one clear primary strategy (match, undercut, or premium) and one backup lever like credits or bundles.
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• Write down your floor price and target margin so that every discount decision stays within limits.
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• Review competitor price pages on a set schedule, not after every small move, so you avoid panic reactions.

Factors that influence pricing

Pricing starts inside your business, then moves out to the market. You need prices that cover your costs and still make sense next to competitors.

Internal factors shape what is financially safe. External factors shape what customers will accept and how far you can move within the market range.

Internal factors

Your cost structure sets the hard floor under your price. Include product, delivery, support, and sales. If you ignore this, every discount cuts straight into your runway.

Target margins define how much profit you aim for per unit or per account. Set a clear margin band so price changes do not drift into loss without you noticing.

Brand positioning is about where you want to sit in buyers’ minds: budget, mid-market, or premium. Your price should reinforce that story, not contradict it.

Your value proposition is the link between outcomes and price. The clearer the value, the more room you have to sit above pure cost-plus or bare minimum rates.

External factors

External forces decide the range you can play in. Demand, competition, and customer budgets all limit how high or low you can go without losing deals.

In competitor-based pricing, you still start from your own cost and margin. Then you decide whether to match their prices, charge less, or charge more based on rival price points.

A simple competition-based pricing example is a startup that undercuts only the entry tier, while keeping higher plans close to market to protect margins.

Market demand also matters. In a fast-growing space with many unmet needs, you may have more room to charge for speed or quality than in a slow, crowded market.

Customer expectations come from what they already pay for and how they buy. If most tools are monthly subscriptions, a very high upfront fee may feel risky.

Industry maturity plays a role as well. In mature markets, price bands are tight and easy to compare. In newer categories, buyers may accept wider price swings.

Quick view of key factors

These factors work together. Strong internal economics let you survive tests in the market. Clear market signals keep you from setting prices that look random or unfair.

Why startups need a competitive pricing strategy

Competitive pricing is risky when it is reactive. A clear strategy lets you use price competition to grow, not just to cut. A plan forces you to tie prices to costs, value, and goals. You avoid random discounts that feel good now but hurt later.

Faster entry and easier customer acquisition

Competitive pricing lowers the barrier to first use. When buyers compare tabs, a clear, fair price helps you reach the shortlist. This matters most in noisy markets. If tools look similar, a sharper price or clearer tier often wins the trial or first deal.

Clearer position in crowded markets

Your pricing sends a strong signal. Are you the budget option, the safe mid-range pick, or the premium expert in the space? A defined competitive pricing strategy example might be: match the mid-market on price, but include setup, so you feel “done for you.”

Better control of unit economics

A strategy sets guardrails for margin, discounts, and deal sizes. You know when a price is risky before you sign the contract. This discipline helps in long sales cycles. You can trade price for volume, term length, or logo value without guessing.

When competitive pricing is not the right lead move

Competitive pricing should not replace a strong product story. If you undercut with no clear edge, you invite a race to the bottom. It is also a poor fit when you sell deep expertise or regulated work. There, reliability and trust matter more than being the cheapest.

If your product has a sharp, unique outcome, pure price competition may even weaken your signal. A higher, value-led price can fit better.

When it helps most

Competitive pricing tends to work best when:

• Buyers can switch tools often and do not want a heavy lock-in.
• The category is crowded, and features look similar on the surface.
• You are early and need quick proof points from paying customers.

Used this way, competitive pricing becomes a growth lever. It helps you win early, learn fast, and later shift focus from “low price” to “clear value.”

Using competitive pricing to scale fast

Competitive pricing should not stay a launch trick. Used well, it can help you gain users, learn fast, and then move prices up as your product and brand grow.

Start with a sharp but controlled entry offer.

At launch, many teams use lower prices to reduce risk for early buyers. This works best when discounts are clear, time-bound, and tied to small starter plans.

One of the cleaner competition pricing examples is a startup that offers “founding customer” rates for 12 months, then moves those accounts to standard plans with clear notice.

As you do this, protect your floor price. Entry offers should be cheap to start, not cheap forever. Make sure support and infra costs still fit your margin goals.

Scale with dynamic tiers and price moves

As volume grows, you gain room to adjust tiers, usage bands, and discounts. This is where competitive pricing strategy examples move from flat cuts to smarter structures.

You might lift the price on high-usage plans while keeping the entry tier steady. Heavy users often care more about reliability and features than small price jumps.

Dynamic moves work best on a schedule. Plan reviews each quarter so you can react to demand and competitor changes without constant churn in your price page.

Shift from price-led to value-led

Over time, you want to compete less on “cheapest” and more on outcomes. That means adding features, support, or guarantees that justify higher tiers.

A common competitive pricing strategy example is to keep the old low tier, but introduce a richer mid-tier at a higher price once you prove value.

When customers see clear ROI, small increases feel fair. Share simple value stories in sales and on your site. That builds your credibility.

Simple action points to use competitive pricing for growth

• Launch with a clear, limited, low-price tier to win early users.
• Track unit economics by plan so you know which deals are healthy.
• As usage and trust grow, raise prices on higher tiers or add new premium plans while keeping entry paths open.

Common competitive pricing mistakes startups make

Competitive pricing can help you grow, but it is easy to misuse. According to research by CBInsights, 18% of startups fail due to pricing and cost issues, making it one of the top five reasons for startup failure.

These competitive pricing mistakes show where teams often slip and how to stay out of trouble:

• Underpricing and killing margins. Some teams cut prices to win first deals and never raise them. Costs grow, but plans stay cheap, and support gets crowded. To fix it, set a clear floor price and margin band. Plan when prices will rise as product quality and trust improve.
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• Copying competitor pages blindly. A team clones a rival’s plans and discounts without knowing their costs or goals. This is a competitor-based pricing example gone wrong. Instead, use rivals as a range, not a template. Map their prices to your own costs, value, and target segments before you react.
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• Starting a price war, you cannot win. Deep cuts may trigger rivals to match or beat you. Bigger players with more cash can hold out longer and squeeze you. To avoid this, compete on structure and value, not only on the lowest price. Use bundles, services, or guarantees as extra levers.
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• Ignoring brand and value story. If your price looks cheap but you claim to be premium, buyers get confused. Low prices can weaken a strong positioning. Align your pricing with your pitch. If you sell expertise or outcomes, make sure your rates signal that, not a bare-bones budget.
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• Over-discounting and training buyers. Constant promo codes and “limited-time” offers teach customers to wait. Full price becomes meaningless. Set firm rules for discounts. Tie them to real triggers like yearly contracts, larger seats, or early access, not every slow week.
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• Not tracking shifts in the market. Some teams set prices once and leave them. Competitors move, demand changes, and your plans slowly drift out of sync. Schedule simple price reviews. Check key rivals, close rates, and unit economics. Adjust with intent, not in a panic after lost deals.

Turn competitive pricing into a system

You now have ideas from these competitive pricing examples to grow your business. To run those ideas in the real world, you need billing that can keep up with changing tiers, discounts, and usage rules.

Orb gives SaaS companies a billing platform built for flexible pricing. Orb RevGraph separates usage data from pricing logic so you can adapt plans without constant engineering work.

Here is how Orb supports your custom pricing:

• Define custom billable metrics from raw events: Orb ingests raw event data at scale, so you can set your own metrics in a SQL editor or visual editor, without requesting engineering resources each time.
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• Build tiered, hybrid plans that stay manageable: Launch free tiers, add usage allowances, and support multi-dimensional pricing as your catalog grows, without hacks.
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• Test pricing changes before you ship them: Use Orb Simulations to see how new structures will affect revenue and usage, so product and finance can align before launch.
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• Keep invoices accurate as pricing evolves: Orb recalculates invoices when you update plans and keeps an audit trail behind every charge.
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• Sync billing data across your stack: Connect Orb to payment gateways, CRMs, and data warehouses so usage, revenue, and invoice data stay in sync.

Ready to turn your competitive pricing strategy into something you can test, tune, and trust? See how Orb helps teams move from quick pricing changes to a durable system.

FAQs

What is competitive pricing?

Competitive pricing is a pricing strategy where you set prices based on what competitors charge. With competitive pricing, you still factor in your own costs and value, so prices stay profitable and fair.

How does competitive pricing work?

Competitive pricing works by comparing your product and price to key rivals, then deciding whether to charge less, more, or at the same rate that they do. In a competitive pricing approach, you also tune tiers, limits, and discounts.

When should a business use competitive pricing versus other pricing models?

A business should use competitive pricing when customers compare many similar options and can switch tools easily. In these cases, competitive pricing keeps you in the expected range, while value-based models fit unique offers.

What are the best practices when implementing competitive pricing?

Best practices for implementing competitive pricing include knowing your cost floor, setting margin targets, and choosing a clear stance. With competitive pricing, you also set rules for discounts and test changes before rollout.

How often should you revisit your competitive pricing strategy?

You should revisit your competitive pricing strategy at least twice a year, and quarterly in fast-moving markets. Regular reviews keep competitive pricing aligned with competitor moves, demand shifts, and your own unit economics