Many businesses feel that lowering prices to be more competitive can be disastrous for them (and often very true!) and so instead, they settle for a price that is close to their competitors.

Any price movements made by competition is then mirrored by yourself: so long that you can compensate for any reductions if they lower their price.

Your business may be considered as one of the more dominant within its market because you offer a service or product that is unique or popular (through branding). As a result, you may have the power to set the price in which your competitors will attempt to follow.

c) Price Bidding aka Close Bid Pricing

Price bidding is a strategy most common with manufacturing, building and construction services. For example, if a restaurant was to be  decorated, then the owner would consult a number of decorating services for a quote and the best offer (not necessarily the lowest) would be taken. If this was considered a big job (likely to generate high revenue), then some decorating businesses would consider cutting their prices as it may account for a large proportion of their annual revenue.

Sometimes, particularly if it was a job for the government, all the consulted businesses will send a representative to bid for the work as if it was an auction.

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