Why You Should Stop Competing on Price - and How to Do It

Published: 25 Aug - 2022 by Ben Rendle

Many businesses compete on price simply because they haven’t contemplated taking another route. The problem is that simply slashing your prices and trying to undercut your competitors can set you on the path towards financial failure. Competing on price often leaves small businesses with narrow profit margins and picky customers who are always trying to get something for nothing. Here’s how to stop competing based on price and shift your focus to create a more profitable business.

So When Should You Cut Your Prices?

When you have a cost advantage over your competitors, it makes sense to compete on price. If you gain an exclusive distribution agreement with a supplier, then you should be able to undercut your competitors without taking a hit yourself. However, this is not the case for most small businesses and so competing on price just means smaller profit margins. 

Ward Off the Vampires

Every business owner has had to deal with a vampire client or customer at some point in their journey. These vampire clients question the price of absolutely everything, but don’t see the value of anything. They are, therefore, extremely difficult to work with and though they may bring in revenue, they don’t generate a significant amount of profit. They want to bleed your business dry. 

When you stop competing on price, these vampire clients may fly elsewhere but if they aren’t generating profit, then that’s ultimately a good thing for your business. Instead, you can focus on attracting high value clients and customers who will instead permit your business to grow. 

Start As You Mean to Go On 

During the startup stage, many business owners compete on price because they lack confidence and see selling themselves short as a surefire way to attract business. Unfortunately, this will not start your business off on the right note and won’t bring you the profit margins that you need to grow and expand. Instead, include the fact that you won’t be competing on price in your initial business plan and keep this intention at the forefront of your mind. 

Make Quality Your Selling Point 

Price and value are not the same. If you want your clients or customers to pay more, then you need to communicate the quality of your products or services to them. Take care to demonstrate your expertise to your clients and show up as the solution to their problems in order to earn their trust. 

Content marketing is an enormously valuable method when competing based on quality. Through constantly publishing quality content, you not only attract your customers’ attention but present yourself as the hero with the answer to all of their problems. When you use the power of content to differentiate yourself from your competitors, you will receive far less pushback on pricing. 

Excellent customer service is another key part of competing on quality. When you outstrip your competitors in this area, your good reputation will grow and the referrals will come flooding in. This not only builds trust, but will lead to repeat business, too. 


Competing on price is an effective strategy if you have a cost advantage over your competitors but otherwise it will most likely lead you towards financial uncertainty and even lower the quality of the products or services that you provide.

It’s difficult to stop competing on price once you have begun to do so, so always start as you mean to go on and compete based on quality and excellent customer service from the beginning. 

However, if you have already started your business then it is possible to change your approach. Re-evaluate your marketing strategy and focus on quality, rather than low prices. In the long term, this approach will prove much more beneficial for your business.


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