Price cutting is a lousy strategy. Period. Just don’t do it if you don’t have to. One reason is that price cutting is a game your competitors can play too, and we both know they’re nowhere near your league.
The thing is, somebody can always come in cheaper. Your competitor can decide to basically “give it away” for a while with the goal of “building market share.” If they’re dumb enough to employ this so-called “strategy”, let ’em! Let them give it away if that’s the only way they can get business. Revenue they lose by cutting prices becomes lost profits that can’t be invested in research and development, so they will ultimately short-change their customers by denying them innovative new solutions in the future. And what happens if material costs go up? Or other expenses like insurance rise? Or if an unexpected expense or crisis occurs? Then what?
Let the other guys sell on price. You sell on VALUE!
Your value might mean better quality, a better experience, or any number of things that will become much more important to your customer once you tell your value story the right way.
So rather than fretting over how you can compete on price, focus instead on giving your customers VALUE. Go get ’em!
Every one of your competitors has access to a pencil. And with it, each of them can mark down prices any time it wants to. And there goes your advantage.” – Jack Trout, Repositioning