Define the decision before calculating
Record these inputs and boundaries
- Define the exact offer, unit and customer segment being compared. (not complete)
- Reconcile relevant unit cost, shared-cost treatment and available capacity. (not complete)
- Put every observed price on the same inclusive or exclusive indirect-tax basis. (not complete)
- Record differences in scope, quality, payment terms, location and service level. (not complete)
- Set a stop condition for a price that cannot cover the chosen cost boundary. (not complete)
Compare a labelled base and downside scenario
| Decision input | Base case | Downside or boundary case | Decision checkpoint |
|---|---|---|---|
| Observed competitor price | 100 currency units for a defined offer | 100 with unknown scope and tax basis | Treat the second observation as incomplete, not comparable evidence |
| Your relevant unit cost | 70 on the same basis | 90 after omitted delivery work | Reconcile the cost boundary before testing price |
| Available capacity | Enough for the planned volume | Requires displaced higher-contribution work | Test capacity and opportunity cost separately |
- Collect observations for genuinely comparable offers and label the evidence source.
- Normalise unit, scope, service level, period and tax presentation.
- Test the candidate price against your own cost and contribution boundary.
- Challenge volume and capacity without converting an observation into a demand forecast.
- Change the offer, segment, cost or price when the boundaries do not overlap.
Interpret the result and choose the next step
A competitor number is usable only after you can explain what offer, customer, scope, tax presentation and service level it represents—and whether your own economics can support a comparable promise.
Run the exact calculation in the registered planner
- Target Margin & Pricing Planner
Set a price for a target gross margin
Decision questions
- Should I always match a lower competitor price?
- No. First compare scope and basis, then test your own contribution and capacity. Matching an incomplete observation can create an unviable commitment.
- Can competitor prices still be useful?
- Yes, as labelled market observations that help frame an offer comparison. They do not replace your cost, capacity or customer evidence.
Method and source scope
- Target Margin & Pricing methodology — Margin101: Product-owned calculation, units, assumptions and limitation contract used by this guide.