I know of a lot of companies that often price their products or services without truly researching what the market will bear. The customer is king but you as a merchant don’t deserve the crown if you leave money on the table so to speak.
In some cases, analyzing competition is as simple as researching what a similar (or identical product) costs with competitors reaching your target market/s. This is easier to do with commodity like items. You still need to factor in costs at different levels (e.g. direct from manufacturer/importer, through resellers/distributors, sales reps and agencies, separate companies from the same owner selling via other channels, etc.). You also need to look into sales to the state and government markets. It is critical to learn what your competitors are doing in everything from their website and content to trade shows, PR, marketing materials, strategic alliances, SEO, PPC, what customers say about them and much more.
In terms of services, identify your competitors and see what they are charging at different levels for the equivalent service/s you offer. Again, you want to learn everything about them from their website and content to trade shows, PR, marketing materials, strategic alliances, SEO, PPC, what customers say about them and much more.
Keep in mind pricing often is negotiable especially in larger quantities or if a supplier is willing to cut prices more to be able to say to others that some prominent Fortune 500 company is a customer of theirs. This often leads to other similar large accounts.
A critical item to investigate is unique selling propositions. You don’t need to be the cheapest if you offer the best service or a similar service with some value added features. Identify the unique selling proposition for your competitors as well as their pricing. While you are at it, see if you can size the market for your product or service by channel and market and at a regional, national, and global level. Some companies actually will launch a product or service without doing their homework. This is like constructing a building without the proper foundation. Use the right tools as you build your business. If you take the necessary precautions and hire the best team members to take your company to the next level, don’t be surprised if one day your small building is transformed into a skyscraper or several of them.