10 Ways to Deal When Your Competitors Lower Their Prices

10 Ways to Deal When Your Competitors Lower Their Prices:from Business 2 Community by Young Entrepreneur Council

Question: My main competitor just dramatically lowered their prices. What can I do to show my customers that they shouldn’t switch to the lower-priced service?

Question by: Lisa

Double Your Value

“Most customers make decisions based on price and perceived value. When a competitor cuts prices, your competitive edge is to double the value of what you’re offering in a way that is meaningful for your target customer. There are many ways to do this, including expediting delivery, offering additional payment plans, or simply improving your customer service experience.”
- Alexia Vernon | Communication and Leadership Author, Speaker, Coach, and Trainer, Alexia Vernon Empowerment LLC

You’re the Higher Quality Option

“Sometimes having a competitor slash prices isn’t always a bad thing. When you think about it, slashing prices (unless you’re selling on crazy high volume like Wal-Mart) cuts a company’s margins and makes it less flexible and less attractive to higher quality customers. Position yourself as the high quality option. Make it an “apples to oranges” comparison rather than you both trying to be apples.”
- Trevor Mauch | CEO (Chief Entrepreneurial Officer), Automize, LLC

Appeal to Customers’ Needs

“Your competitor is under the impression that cost, not value, is the most important aspect of the transaction. You may lose some customers who want a cheaper service or product, but stick with the clients who care more about value. Understand what those clients want more than cheaper prices and give it to them in spades.”
- Kelly Azevedo | Founder, She’s Got Systems

Why Are You Stickier?

“Yes, your competitor has lower prices. But so what? You have a better brand, experience, community, service…the list goes on and on. So remember to remind your users about all of the incredible context you have created around them for their comfort and success, and reinforce that trust in YOU that will keep them from straying elsewhere.”
- Caroline Ghosn | Co-Founder and CEO, The Levo League

Sell a Full Experience

“There will always be competitors looking to jump in, lower prices and take your customers away. What you can do to keep your customers is fully explain to them that they pay more to stay with you because you provide the best overall experience. That means the best quality and, equally as important, the best customer experience, however that translates to your niche.”
- Justin Beegel | Founder, Infographic World, Inc.

Critical Thinking — or Just Common Sense

“Help you customers think about WHY the competitor would have had to make such a drastic change. Is their product or service that low of quality? What makes you think they’ll perform better than before, just because their prices are lower? Close their eyes on the dollar signs by helping them consider the contributing factors.”
- Therese Kuster | Owner, TargetClick Marketing Solutions

Re-Investing Your Profits

“Not lowering your prices means you maintain the profit margins to re-invest in your product or service. Convey to your customers that this is why they should continue to pay your price…because it’s invested into the superior quality of service that they have grown accustomed. You won’t compromise your profits and you won’t compromise your brand.”
- Benjamin Leis | Founder, Sweat EquiTees

Differentiation Is Key

“Zappos has proven that you don’t need to be the lowest cost provider to succeed—if you want proof, just compare their prices against other online retailers that are often 20-40 percent cheaper. By eliminating risk with their ridiculously customer-friendly refund and exchange policies, and providing world-class customer support, they’ve been able to build a billion dollar company—and you can too.”
- Matt Mickiewicz | Co-Founder, Flippa and 99designs

Collect Customer Testimonials

“You know your product to be better, so why make consumers second guess it? If you’ the market leader,ignore the price points when pitching your product/service to others. Fill the page with customer testimonials, value over cost. Don’t give the consumer a reason to second guess your price point by comparing yourself to another brand—you just helped them sell to someone who cares only about cost.”
- Jerry Piscitelli | Owner / Inventor, Portopong LLC

Show Your Face

“You don’t need to do anything other than show them that you are still there. People who lower their prices are almost always going to lower their service level. Use that to your advantage by providing a higher service value. Whatever you do, do NOT compete on price.”
- Lucas Sommer | Founder CEO, Audimated
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.