Compete on value, not price.
Competing on price creates a race to the bottom at the sacrifice of quality.
When most people think about how they’ll compete against other companies in their industry, the first thing that comes to mind is beating them on price.
If you can afford to do this, it’s a great trick to have up your sleeve.
But in most cases, you’ll end up seriously cutting your profit margins if you do
Dropping your price, cutting your margins and onboarding new customers is great. In the short term.
But long term you might need to increase your margins to survive and grow the business.
This may mean increasing your prices.
If they become higher than your competitors, the number of signups may drop. And if your product has a recurring payment, you might lose customers.
But there is another way to compete without losing your margins
Compete on value.
Give your customers greater utility or benefit per $ they spend, compared to your competitors.
Add extra features. Improve your customer support. Fix bugs more quickly. Reward loyal customers more often.
There are plenty of ways to add value.
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