Although it may seem like good business sense to lower your prices as a result of competition, this will often hurt your business. In addition to hurting your margin in the short term, the price slashing will actually make it difficult to raise your prices back to their regular rates in the long run.
Here are some great suggestions for competing with low price competitors:
Another way to combat low-ball competition is to be different through a uniquely superior product or service. Your customers will pay more if they’re convinced your product is demonstrably better than your competition. This superiority can be in the form of a feature or function nobody else has, a reputation for being cool or different or a combination of both.
Offer Another Product or Service
A better alternative is to offer a less expensive product or service in addition to the one that may be considered expensive when compared to the competition. When you offer the same high quality product or service for less money, you are effectively competing against yourself.
Spell Out your Value
Demonstrate the real economic value of your product or service. Rather than saying your product saves you time, calculate exactly how much time is saved. If you offer bonuses, what are they worth? Your customers perceive will value if they are getting more for the price they are paying. Show them how they are getting more with you.
Customers will pay extra if your product is easier to buy and use than the competitor’s. Create a hassle-free experience for your customers and you won’t lose them to the competition.
Money Back Guarantee
Customers will pay extra if, in addition to providing the product, you take responsibility for ensuring that it generates that your customer are seeking. Offer a money back guarantee with your product or service.
Label the Low-Ballers
Use true but unflattering labels to position your competition as a less desirable vendor. For example, a low-priced competitor might be headquartered in another state or country. If your customers value the fact that they do their business locally, you label your big competitor as “that out of state” company. If you have a smaller competitor that works out of their home, you label them as a “home business”.