Want to succeed in your startup? Don’t compete on price. Compete on value.
You can’t compete in price when you’re starting out. The big players, already established, have greater leverage on pricing. They undercut, lower prices, offer discounts, offer freebies. They can afford it. You can’t. That doesn’t mean you can’t compete.
If there’s one thing successful startups have shown us is that you don’t have to come out of the gates with the lowest price in order to succeed. You have to add value to what’s already available to customers.
From the customer’s point of view, your company or brand exists only to create value for them and to provide them with results.
Having the LOWEST PRICE is the sacrifice you have to make for not having the HIGHEST VALUE.
If your service or product brings value to what’s already in the market or offers something unique, you don’t need to be the lowest price option. Competing on price is risky because it’s affected by many factors. Supplier costs, shipping fees, and competitor prices are threats that could quickly push you out of being the lowest price leader. If you’re focused on providing the best value, your priority should be on enhancing your offering for your customers rather than worrying about external factors that impact price. As long as you set a fair market price, there’s not much to worry about regarding price.
Loyal customers want value because your offering is an investment to them.
One argument about pricing strategies is that if you don’t offer the lowest price, people won’t make a purchase. This isn’t true. If you don’t have the lowest price, some people may not buy. But who are those customers? Customers who only care about the lowest price can never be loyal to a brand, as their loyalty is to price first. In the end, there’s always someone willing to provide a great deal, even if it’s just for a short time, and when that happens, those price-focused customers will always switch for a lower price.
Value-based customers are your prime group for creating long-term loyal customers because value customers realize the potential in your offering. To value customers, your offering is an investment, one that they want to see mature because there’s benefit for them. They’re the ones who take time to give good feedback, work with you on product enhancements, and evangelize for you my marketing through word-of-mouth, one of the greatest (and cheapest) marketing tools startups have available.