You’ve just bought a new laptop. Three days later, you spot the exact same model advertised for $50 less at another store. That sinking feeling? It’s exactly what price-matching policies are designed to prevent.
When retailers offer price matching, they promise to match competitors’ lower prices—giving customers confidence they’re getting the best deal available. But while this strategy can build trust and boost sales, it’s not right for every business. Read on to learn about the different types of price matching and whether this type of pricing strategy is right for your business.
What is price matching?
Price matching is a competitive pricing strategy in which a company promises to match or beat a competitor’s lower advertised price for an identical product. This assures price-sensitive customers that they will get the best possible deal without having to shop around. Price matching can also help you build brand trust and develop customer loyalty by showing customers that you have their best interests in mind.
Who uses price matching?
The most prominent price matchers are major retailers (such as Best Buy, Staples, Walmart, and Home Depot) that sell widely available products.
It may be more challenging for small retailers to employ a price-matching strategy. Here’s why: Many small businesses cannot purchase their stock in massive volumes the way larger retailers do. Big corporations with a large market share can negotiate special rates for bulk purchases. Lower wholesale rates allow these companies to earn larger profit margins, which they can dip into to fulfill a price match request. By contrast, a boutique online store might not enjoy the same purchasing power, leading to smaller profit margins. If you fulfill a price match request, you might not make a profit.
If you can’t match competitors’ prices, you can still appeal to price-sensitive customers with another approach: matching your own prices. If a customer purchases an item from you and the price drops later on, you’ll refund the price difference to the customer.
Types of price matching
If you can convince customers that they can count on your business for the best price, you might steer them away from a competitor’s store. Here are three ways to offer price matching and stay competitive in your market:
Standard price matching
This is the most common form of price matching. With this strategy, you promise your customers the best price available. If a customer finds an identical product (same brand, model number, and color) at a lower price from a qualifying competitor, you pledge to match the price the customer found. Brick-and-mortar retailers, in particular, may use price matching as a direct response to showrooming (customers examining products in-store and buying at a cheaper price from Amazon or another online competitor).
Some retailers offer post-purchase price matching, too, often within a limited time frame. For example, you might price match if a customer finds a lower competitor price within two weeks of purchase.
Many retailers offer standard price matching on a case-by-case basis, often requiring that the competitor’s item is in stock (not a special order) and that it is truly an identical product. Retailers will likely ask to see written price verification, whether that’s an online price posted on a website or an in-store price documented in an advertising flyer or on a printed receipt.
Price protection
Price protection is a price adjustment tactic that lets customers receive a partial refund if the store later offers a cheaper price for an item they’ve already purchased. This refund will cover the difference between what the customer paid and what the item now costs.
Price protection is almost always confined to a limited window after the purchase. This means customers can’t go to a store seeking a partial refund for an item they purchased three years prior.
A price protection strategy can help you win customer trust, since buyers will know you’re willing to give them the best price you can, giving you a competitive edge over other retailers who sell the same item without this guarantee.
Price beating
Price beating is an aggressive pricing strategy where you not only match a competitor’s price for an identical product, but you also offer an additional percentage or fixed amount off that lower price. For example, you might promise to beat competitors’ prices by 10%. This aggressive price adjustment ensures your customer always gets the best deal, but it can only work if you have the profit margins to absorb such a discount.
Not many retailers offer price beating, since the policy can spiral into price wars, causing both you and your competitors to lose out on profits.
Advantages of price matching
Should you engage in price matching? There are a few compelling reasons to do so. Here are some advantages of a price-matching policy:
-
Enhanced customer trust. Offering to match a competitor’s lower price can show transparency and earn consumer confidence by showing customers you have their best interests in mind.
-
Increased conversions. Price-sensitive customers might be less likely to abandon their carts and more likely to click Buy Now if they know they’re getting a competitive price.
-
Customer loyalty. Price-matching policies can encourage customers to bypass competitors and shop at your store since they know they won’t need to hunt around for the best price.
-
Enhanced brand perception. Price matching can position your brand as fair and customer-focused, improving brand perception.
-
Reduced need for heavy discounting. Price matching can show price-sensitive customers that they’re getting the best deal without you needing to slash prices across the board.
Disadvantages of price matching
Price matching doesn’t work for everyone. In particular, it may not make sense for small retailers who lack the bulk purchasing power of corporate giants. Even some corporate giants (like Walmart and Target) have moved away from standard price matching. Here are some reasons why price matching may not be in your best interest:
-
Eroded profit margins. Constantly matching lower prices can reduce your overall profitability.
-
Potential price wars. Competing retailers may continuously undercut each other, leading to unsustainable pricing.
-
Increased administrative workload. Verifying competitor prices and enforcing price-matching rules can be time-consuming. Managing exceptions and rules around special sales can further complicate the process.
-
Vulnerable to exploitation. Some bad actors may attempt to abuse price-matching policies with misleading or outdated price comparisons.
-
Not applicable to boutique or bespoke items. Price matching only works if identical items are available at other stores. If you custom-make an item, like a bar of artisanal soap, your competitor’s product won’t be identical, and you won’t be able to price match it.
How to monitor prices
To effectively guarantee the best prices, you need to monitor the prices of your competitors. You can use automated price monitoring tools like Google Shopping and Yahoo! Shopping, which routinely compare prices across an array of stores. These sites are designed for retail shoppers, but business owners can use them to see what other companies are charging for the items they stock.
You can also leverage a price alert app. This is a type of software—often a browser extension or standalone app—that can track prices and notify you when a price changes. Popular price alert apps for Shopify users include Latori, Wishlist Hero, The Watchlyst, and Pricefy. All are available in the Shopify App Store.
Price matching examples
Price matching isn’t common among small businesses, and it’s still largely confined to big box retailers. Here are some examples:
Best Buy
Unlike Walmart, Best Buy matches the prices of items sold at rival stores. The company publishes a list of key online and local competitors (e.g., Amazon, Target, Walmart, Home Depot, etc.), and it will match these competitors’ prices for identical products. This means the products must be the same brand, model number, and color.
Best Buy’s price match policy excludes clearance, open-box, and refurbished items, and it applies only to new, immediately available products sold directly from Best Buy, not from third-party sellers who use the Best Buy marketplace platform.
Customers can price match at the time of purchase, or, if they bring back a purchased product within its return and exchange period, Best Buy will refund the difference between what the customer paid and what a competitor is offering.
Micro Center
Computer electronics retailer Micro Center matches prices for identical, in-stock items at rival stores. However, it draws the line at special sales. The Micro Center price matching rules state: “We cannot price match special sales such as Prime Day, Black Friday, and Cyber Monday.” The rules also exclude clearance items, pre-owned items, refurbished items, and more.
Walmart
Walmart permits price matching of its own online prices when shopping in‑store, but it no longer matches competitors’ prices. Customers must find the identical item (same model number, brand, quantity, color) in stock on Walmart.com, show it to a Walmart store associate, and then request a price adjustment before checkout.
What is price matching FAQ
What is the meaning of price matching?
Price matching is a pricing strategy where a retailer agrees to match a lower price offered by a competitor for the same product. This policy helps ensure that a customer always gets the best deal by shopping at that retailer.
What are the pros and cons of price matching?
Price matching can build customer trust, increase sales, and help retailers stay competitive by offering the best available price. However, it can also reduce profit margins, lead to frequent price comparisons, and become challenging to manage.
Why don’t companies price match?
Some companies avoid price matching because the required administrative work can be time-consuming and the practice can eat into profit margins. Other businesses don’t price match because they sell unique items that customers can’t find at other retailers.
