Which type of pricing strategy adjusts prices primarily based on competitor prices?

The pricing strategy that adjusts prices primarily based on competitor prices is status quo pricing. This approach involves setting prices in line with the existing market conditions, often to maintain a competitive position within the industry. By focusing on what competitors are charging, businesses employing status quo pricing aim to avoid price wars and maintain a level of predictability in their pricing strategy.

This method is particularly beneficial in markets where price competition is intense, and it helps businesses to align their offerings with consumer expectations shaped by competitors’ pricing. It allows companies to manage their pricing strategy without making significant moves that might lead to market disruption.

In contrast, value-based pricing focuses on the perceived value of the product or service to the customer rather than on competitor prices. Cost-plus pricing involves determining the price by adding a markup to the cost of goods sold, regardless of competitors' pricing. Dynamic pricing refers to a flexible pricing strategy where prices are adjusted in real-time based on demand, market conditions, and other factors, rather than solely on competitor prices.