5 Most Effective Ways to Fight a Price War & Avoid Falling Victim to Low Price Competition

brand direction & styling by us for The Little Pin | photo by Nina Ruth Photography

When businesses and entrepreneurs experience slow sales, they often think that the main issue is - price.

I often hear them complaining about how their audience and customers are price-sensitive, and that they have no choice but to compete on price because “customers simply don’t have the budget.”

However, in most cases, the issue isn’t that they literally don’t have the money to pay for what businesses sell. This is why there are people with different income levels buying the same thousand-dollar handbags. Some people have that money already sitting in their bank accounts, and some people make it their resolution to save enough to buy the things they want.

Subscription services are also great examples. I’m one of those people who still refuse to pay for music subscriptions to get rid of the annoying and intruding ads in between songs. Of course, it’s not because I don’t have $9.99 sitting around. It’s simply because I don’t value the benefit of removing the ads enough to pay $9.99 for it.

“The right price” comes down to the perceived value of what you sell, and in most cases, it’s not because people don’t have the budget. It’s because they don’t think the value of the product or service is not enough to justify the price.

If you find yourself having to lower our price and give discounts constantly, you are most likely in a price war and competing on low price. A price war is a game you will never win because it’s a race to the bottom. When customers choose you simply because you are cheaper, they will switch to someone else when they find an even cheaper option. There is no loyalty or retention, which means inconsistent sales and no growth.

How to get out of a price war, you ask? Here are 5 ways to stop competing on price, so you can start standing out from your competition:

1. Do your research to understand why you're in this price war

Is the reason why you are in a price war an issue on communication and marketing, business model, customer experience, partnerships, or something else? Identify the issues, then prioritize and fix them. 

2. Add value to your offer instead of lowering your price.

If people don’t value what you sell enough, they naturally want the cheapest option. Instead of using the price of your competition as an anchor and constantly pricing below them, focus on raising the perceived value of what you sell and communicate it effectively through marketing.

If you don’t think marketing has been working for you, click here and read the 6 Reason Why Your Marketing Isn’t Workin (+How to Fix Them.)

3. Find your sweet spot in the market

Identify your differentiator in the market. You don’t have to be everything to everyone, which leads you to become a master of none. Find out what your target customers care most about, and stand out to them by fulfilling their needs and wants.

Read the Myth of Differentiation & How to Truly Stand Out.

4. Connect with people and increase your value through your brand

Luxury brands and businesses that are able to charge premium do this well. Don’t just market your products or services, take it one step further and grow a brand that people feel connected with and feel loyal to, a brand that they are so excited to buy from that makes them tell their friends! The goal of these successful brands is to become “the go-to brands” their customers think of when looking for products and services in their markets.

Read How to Create Your Strong Brand Positioning in the Market and How to Cut Through the Noise, Get Your Brand Seen & Heard.

5. Get laser-focused on your target customers

If you want to become the go-to brand in your market, you need to be on the mind of your customers. In order to achieve that, you need to know your target customers, the niche you are serving. Besides demographics, you need to know what they want most, what they value, what’s on their mind, what are their challenges and headaches, their lifestyle, and their psychographics. Then tailor your brand, offer, marketing, customer experience, and everything else in your business to them specifically to keep building loyalty. Once you’ve become the go-to brand for what you do in your customers’ minds, they will continue to buy from you and refer their friends to you.

Need direction to figure your target audience? Click here to learn the 3-Steps to Identify Your Niche.

Ask yourself - “How can I do to add more value to my customers?” And make it a habit to keep improving different areas of your business to deliver higher perceived value, so you can price confidently while keep attracting your best customers!

Want to get more ideas to drive sales without discounting? Click here to read 5 Ways to Drive Sales Without Discounting.

To take the perceived value of what you sell to the next level, ramp up your customer experience! Read Debunking 3 Myths of Customer Experience to Boost Your Brand and 3 Secrets to WOW Your Customers, Grow Loyalty & Get People to Spread the Word.

Don’t forget to grab your seat at our FREE training, so you know how to grow your profitable brand people love AND a loyal customer community who keep buying from you!