What is price parity?

Price parity in plain English

Most products are sold by more than one retailer. A branded kettle might be available from the brand's own website, two department stores, a supermarket and a marketplace seller. Price parity is when all of them charge the same price for it.

The term is used in two ways:

• By brands, to mean their products are priced consistently across all their stockists, usually at or near the recommended retail price (RRP).
• By retailers, to mean matching competitors' prices on the same products, so they are never the expensive option.

Either way, the question is the same: for this exact product, what is everyone charging?

Why price parity matters to brands

• Positioning: a premium product that is always discounted somewhere stops looking premium.
• Stockist relationships: retailers that hold the RRP lose sales to the one that doesn't, and may stop stocking the range.
• Direct sales: a brand's own website is rarely the cheapest place to buy its products, so price gaps send shoppers elsewhere.

Why price parity matters to retailers

• Conversion: a shopper who sees the same product cheaper elsewhere often leaves.
• Margin: matching every cut erodes margin, so retailers need to know which gaps actually matter.
• Visibility: on Google Shopping, price is one of the things Google weighs, and one of the first things a shopper reads.

A note on the rules

A brand can recommend a resale price, and many do. In the UK, though, fixing or enforcing a minimum price that retailers must sell at is resale price maintenance, which competition law prohibits, and the Competition and Markets Authority has fined suppliers for it, including over online prices. Marketplaces' own price parity clauses have also been challenged by regulators. This guide is about monitoring prices, not agreeing them: if you are unsure what your agreements allow, take legal advice.

Why prices drift apart

Even when everyone starts at the RRP, prices separate. The most common causes:

• Promotions: one retailer puts a range on sale, or runs a sitewide discount code.
• Automated repricing: retailers that reprice against competitors can trigger a chain of cuts.
• Delivery charges: two identical prices become different totals once delivery is added.
• Clearance and old stock: older models or end-of-line stock sold off below the usual price.
• Marketplace sellers: third-party sellers on marketplaces set their own prices.
• Feed errors: a price not updated in a retailer's product feed, so the price on Google differs from the price on the website.

What Google Shopping changes

Price comparison used to mean a shopper opening several tabs. Google Shopping has done the work for them. It uses product identifiers such as the GTIN (the barcode number) to recognise the same product from different retailers, and shows the sellers and their prices together.

That makes any parity gap visible to every shopper who searches for the product, at the moment they choose where to buy. The cheapest seller, or the one with a sale badge, has a clear advantage, and a gap of a few pounds can decide the sale.

How to monitor price parity

1. Choose the products that matter: your best sellers, your hero lines, and the products most often discounted.
2. Find every seller of each product, matched by its identifier rather than its title, since retailers title the same product differently.
3. Record every seller's price, including delivery where it applies, and whether it is on sale.
4. Measure the gaps: who is cheapest, how far each seller is from the lowest price and from the RRP, and how many sellers are below it.
5. Track it over time, so you can tell a one-off promotion from a pattern, and see who moves first.

Merchant Visibility records every seller listing the same product on Google Shopping each week, with its price, delivery cost and any sale, so you can see where you are the cheapest, where you are being undercut, and by how much. See How to track Google Shopping results for the wider picture.

Frequently asked questions

What is the difference between price parity and price matching?

Price parity describes the state of the market: whether the same product costs the same everywhere. Price matching is something a retailer does to reach it, by lowering its price to match a competitor's, either automatically or when a customer asks.

Can a brand make retailers sell at the RRP?

A brand can recommend a price, but in the UK, requiring retailers to sell at or above a set price is generally resale price maintenance, which competition law prohibits. Take legal advice on your own agreements.

Does Google Shopping show the cheapest price first?

Not necessarily. Google weighs relevance, product data, the retailer and, for ads, the bid, as well as price. That is why a retailer can rank above a cheaper rival. Price still matters: it is shown on every listing, and shoppers compare.

Should I include delivery costs when comparing prices?

Yes. Shoppers judge the total they will pay, and two identical prices can become quite different once delivery is added. Compare the price with delivery (the landed price) as well as the headline price.

How do I find out who is undercutting me?

Search Google Shopping for your products and note every seller and price. To see it every week, across your whole range and your competitors', track it with a tool such as Merchant Visibility.