Competitive Pricing Analysis: Research Without a Race to the Bottom

Why You Need Competitive Intelligence

You cannot price in a vacuum. Customers compare. They get three bids. They Google "average cost of kitchen remodel" before they ever call you. If you do not know what competitors charge, you are guessing — and guesses cost money in both directions.

But competitive pricing analysis is not about matching the lowest bid. It is about understanding the landscape so you can position yourself deliberately.

How to Research Competitor Pricing

Direct Methods

• Mystery shopping — Call competitors for quotes on a standardized job. Be ethical about it, but understand that this is standard business practice.
• Customer feedback — Ask prospects what other bids they received. Most will tell you if you ask respectfully.
• Published pricing — Some competitors list prices on their websites, Yelp, Angi, or Thumbtack profiles.
• Subcontractor networks — Your subs work for other generals. They know the going rates.

Indirect Methods

• Industry surveys — Trade associations publish annual pricing surveys. RSMeans data is the gold standard for construction.
• Government data — The Bureau of Labor Statistics publishes wage and cost data by trade and region.
• Job boards and classifieds — What competitors pay their people tells you a lot about their cost structure.

Building a Competitive Pricing Map

Create a simple spreadsheet with these columns:

| Competitor | Service | Their Price | Your Price | Their Quality/Speed | Your Quality/Speed | |-----------|---------|------------|------------|--------------------|--------------------| | ABC Co. | Bath remodel | $18,000 | $22,000 | 6 weeks, no warranty | 4 weeks, 2-yr warranty |

Do this for your top 5-7 competitors and your top 5-7 services. Patterns will emerge quickly.

The Three Positions

Every business occupies one of three pricing positions:

1. Premium (Top 20% of the Market)

You charge more and deliver more. Your marketing emphasizes quality, expertise, warranties, speed, or customer experience. You actively repel price shoppers.

Best for: Established businesses with strong reputations, specialized skills, or capacity constraints.

2. Mid-Market (Middle 60%)

You charge competitive rates and compete on a combination of price and quality. Most small businesses land here by default.

Best for: Growing businesses building a reputation. The risk is being unremarkable — good enough at everything, best at nothing.

3. Budget (Bottom 20%)

You compete primarily on price. Volume must be high because margins are thin. This requires extreme operational efficiency.

Best for: Businesses with genuinely lower cost structures — minimal overhead, owner-operated, no employees. Dangerous for anyone carrying real overhead.

The Race to the Bottom

Here is what happens when you chase the lowest price:

1. You win the bid at $15,000
2. Your true cost was $13,500 (but you did not know because you never did the math)
3. An unexpected issue adds $800 in costs
4. You "make" $700 on a two-week job — roughly $4.38 per hour for the owner
5. Meanwhile, the competitor who bid $22,000 lost the job but won the next one and made $6,000 in real profit

Winning every bid is not a strategy. Winning the right bids at the right price is.

How to Use Competitor Data

Know your floor

Your cost-plus number is your floor. No competitor's price changes that. If the market price is below your floor, either find a way to lower costs or do not compete for that work.

Identify gaps

If every competitor quotes 4-6 weeks and you can deliver in 2, that is a differentiator worth premium pricing. If everyone offers the same basic warranty, an extended warranty sets you apart.

Spot weakness

If a competitor is significantly cheaper, find out why. Are they cutting corners? Uninsured? Paying workers under the table? You can use that in your sales process without badmouthing: "We carry full workers' comp and liability insurance, and all our work is permitted and inspected."

Segment your market

You might be premium for one service and mid-market for another. A roofer might charge top dollar for slate work (rare skill) but be competitive on standard shingle replacements (commodity).

Updating Your Analysis

Competitive pricing is not a one-time exercise. Review it:

• Quarterly for your top services
• Annually with a full competitive audit
• Immediately when you start losing bids you used to win

Markets shift. New competitors enter. Material costs change. The businesses that stay profitable are the ones that stay aware.

The Bottom Line

Know what the competition charges. Know why they charge it. Then set your price based on your costs, your value, and the position you want to occupy. The goal is not to beat them — it is to make an informed, intentional decision about where you stand.