How can predatory pricing be bad for the economy?

In the past few years, more and more companies tried to find ways to eliminate the competition or get in front of them unlawfully. One of the main tactics that they are using is predatory pricing. But what is this and why is it a bad thing for your company? Let’s find out.

What is predatory pricing?

The idea behind predatory pricing is that this is a pricing strategy through which you are setting a very low price, and the idea is to acquire new customers. Most of the time, the predatory pricing tactics will acquire customers from existing companies that can’t offer the price you have. The predatory pricing approach can be used to grow a company very fast, all while driving competitors out of the market.

How does predatory pricing work?

There are numerous tactics employed here, based on the company. The first thing you have to do is to pick what goal you have. You either want to capture a lot of market attention, or you want to drive the competition out of business while benefitting from that. 
Maybe the most common predatory pricing tactic is to undercut prices, sometimes up to 50% less than the cheapest competitor out there.