When the price is a good way to stand you out from your competitors?
I opened a discussion asking if it's a good idea to compete with big players. And the price discussion came out.
I think it's a common sense that you shouldn't focus on building features (as @codegeek1001 wisely pointed). Instead, know what your customers need and solve their problem. OK, we agree in this aspect.
But we are used to seeing every day new products being launched with similar features but with a different business model, or only a different price.
Here's an example:
Everyone must know Intercom. Their core product/feature is a live chat for websites. The cheapest price costs $136/mo, which is quite expensive for indie makers or most of the startups.
While searching for alternatives, I came across crisp.chat, which has the same core feature (live chat for websites) and has a freemium business model. You can use it for free for up to 2 seats. Well, an indie maker only needs 1 seat, then I'm using on slackbucket.com, and I gotta say it's awesome!
Even their most expensive plan cost like 30% less than Intercom.
I know there might be no consensus about this subject, but I would like to learn all different point-of-view.
When is the price a good strategy to sand you out from competitors?
When you compete on price you'll get customers who are 'price conscious' rather than 'feature/solution conscious'. These kinds of customers tend to cause businesses a lot more hassle because they care about every nickel and dime.
In answer to your question, I'd say using a lower price as a strategy completely depends on your target audience but in some cases you'd find a faster uptake of users, at least initially, due to the lower price point.
If you're competing in B2B it could be argued that a lower price is actually detrimental as price points can be viewed as a sign of quality therefore lower price means lower quality product.
In B2C however, it appears that most consumers nowadays expect everything to be very cheap or free. Just take a look at any app store.
Overall, I think using price as a strategy to stand out from competitors is rarely a good idea.
What a helpful comment. Thanks @JamieO :)
The biggest problem with price, especially when you are the small one, is the big company can kill you at anytime.
Tomorrow Intercom could match the price of your alternative. Then they are left with what is likely not as good as a product for the same price.
This doesn't mean you shouldn't be cheaper (especially if your costs are much lower), but I would not make your key differentiator.
It's also worth mentioning Intercom has built a reputation to establish itself first then upped its price though stages of growth. It didn't start at that price.
Popularity allowed it to price itself above others, its more brand recognition now for websites who have live chat to show off intercom.
This comment was deleted 7 years ago
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