When you compete on price it’s a very fast race to the bottom.
Bargain Hunters are Only Loyal to Price
If someone bought from you due to your low prices, they’re likely to buy from someone else the minute they find a cheaper alternative.
As soon as there is a cheaper option, you lose that customer.
And, in the world of eCommerce, there will always be a cheaper option.
You get what you pay for
Another fundamental reason we don’t compete on price is fundamental human behaviour.
“You get what you pay for” has been so deeply ingrained in our psyche that if it’s cheap, we expect it to be nasty.
Healthy profit margins are essential
Profit margins are another seemingly obvious reason we don’t want to compete on price.
Less money per unit, in turn, means you need to sell significantly more items to make the same profit you did before you slashed your prices.
Huge companies who turn over hundreds of thousands of units can afford to make very small profit margins.
It takes time, energy, effort and most importantly money to run an online store as a proper business. And running a business is already difficult enough when you’re making a healthy profit.
People pay for values
People will pay extra to buy a product that aligns with their values.
What we buy tells the world something about who we are. Buying an expensive handbag tells the world “I can afford this” (even if they can’t). Buying ethically made products tells the world “I care”.
People pay for rare
When something is rare, it is perceived as more valuable. Think gold, gems and natural resources as examples.
Can you create a limited edition variation of your product? Or perhaps partner with other brands, designers or artists to create limited-edition collaborations. Could create a version of your product with a specific colourway to celebrate or support an event, cause or charity close to your, and your audiences, heart?
Competing to be the lowest-priced retailer is a fool’s game. One we don’t want to play.