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Chan | Should I price lower than competition to attract new customers? |
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♥.~.¨*♥•.♥.*`CooL`*.♥.•♥*¨.~♥
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It largely depends on your marketing strategy – are you doing this to match a competitor’s pricing? Or to penetrate a new market? Or to expand market share? Always try to consider your product or service’s true value to the customer before lowering your price. If you deliver higher value to your customer, if you can communicate that value to prospective customers, and if you have evidence to support it (generally through market research) you should charge higher prices.
Pricing strategy based on what you think your competition is doing can lead to a “price war,” and lower profitability for both you and your competitor. For example, if you believe that your costs are lower than your competition’s costs, you might decide to price lower than your competition. However, you could be wrong – your competition’s costs might actually be close to your costs, and your competitor might lower its price to match yours. Even if you are right, there is no guarantee that a new competitor won’t enter the market who can match your costs (and price) by copying your business model. Game theory is a way to understand the longer-term effect of lowering, or for that matter increasing, your price – e.g. “If I do X, my competitors will do Y, therefore I chose to do Z in anticipation of Y, and on and on.”
Finally, another consideration in lowering your prices is the permanency of such a decision. In some cases, you may be able to restore pricing in the future. In others, this level becomes the new “market price.” If so, what impact will this new price have on your social enterprise or organization’s profitability? Is it sustainable? |
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1-800badcredit
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You can, but make sure you can keep it up. The "no-so loyal" customers that shop for price alone will abandon you just as fast as they flocked to you for the best deal.
Also, don't do yourself a dis-service and undersell your product/service. If it's worth a certain amount then people should pay it.
Cheap customers are usually cheap all around and want more for less. In my own personal experience the guy who negotiated the best price for himself was always the biggest pain in the butt customer to work with. They want everything, will take hours of your time, and are never loyal to you (even though they say they are sometimes).
You're often better off with a fair price and customers that respect you for knowing your worth than you are with 3x the number of customers, none of which respect you or care about you. |
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portentint
 |
This is a dangerous question.
Charging lower than the competition simply to get business is a terrible idea.
Charging less because you can acquire the product more cheaply, though, is a great idea.
If you give customers a bargain, they will expect that bargain time and again. It will become your brand, whether you like it or not. So don't do it unless you can still succeed.
I wrote about this a couple weeks ago. |
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bmwdriver11
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In this economy, if you can price lower and still make a fair profit, while bringing in new business, than I would say heck yes. Americans are more price sensitive than ever, so this could win you a lot more long term customers. |
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golferwhoworks
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good question-- people buy value as well as price. Price isn't evrything to most people. They will pay more for added value so build it in. You are entitled to make a profit. I charge for what I do and I earn every penny and then some with some clients and with others I over earn so it all works out. |
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bill
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Depends on the product or service, and the demand. But generally thats a quick way to indice new clients, then word of mouth gets around. |
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betotron don
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service will attract new customers... |
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estlperc
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I am a successful business owner and I started my business by beating the competition. My prices are lower than all the others near me and it does attract new customers and brings them back to you. Even if it seems like it's not worth it, the traffic you get from lower prices makes up for it. Trust me! Good Luck! |
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