Provide a clear added value – Your customer must know why he’s choosing your product.Work on your branding – Having a strong brand will give you the opportunity to choose between different pricing strategies.Here are some of the things you can undertake to avoid a pricing battle with your competitors: If you’re a small company or a one-man show, it’s probably for the best to avoid wars with your competitors at the beginning.Īctually, you should always avoid starting a price war at all costs. One of the things that can happen when employing a low price strategy is starting a price war with your direct competitors. Low Price Strategy and Small eCommerce Businesses If you aren’t able to provide a satisfying customer service and employ CS representatives, you should seriously consider a different pricing strategy. Speaking about eCommerce businesses, the department that experiences the hugest hit is customer service. By accepting to make minimal profit or no profit at all during the beginning of your campaign, you’re sacrificing on the quality of some departments in your company. On the long run this will create an overall perception of lower quality among your audience, so businesses with premium prices that offer the same quality as you’re, can still have a greater volume of sales. The strategy relies on offering lower prices than your competition no matter the demand on the market and your production costs. Sometimes or better said in most cases, low competitive pricing can be a double headed knife. With low pricing you will find yourself in a situation where you can’t conduct the occasional sale, so you’ll lose a great deal of sales in holiday periods like Black Friday sales, when all of your competitors with premium pricing can afford to give a hefty discount.Įven if you can afford to give a discounted price, your audience can see this as a sign that you actually don’t provide the lowest price on the market. Promotions and discounts are a huge part of your marketing. You compete with all the companies from around the world, not only the ones you can find in your local store. Discounted prices for higher volume orders from your suppliers – Once you establish a high volume of sales because of the competitive prices you offer, you’ll be able to order higher amounts of the production elements you need, which will probably lead to huge discounts from your suppliers.This becomes even better if you’re a reseller and opens the doors towards drop shipping. Faster turnaround time of your inventory – You’ll sell so many products you won’t need to keep them stored for a long time, placing storage costs at the minimum.It’s highly dependable from the type of business you run and the nature of your product, but here are some ways lower prices resulting in increased sales can save you money during the process of production: This is something you probably haven’t considered when scanning through the pros and cons of a low price strategy. After all, you provide quality like everybody else yet you got the lowest prices. Your sales will skyrocket, or at least they have the potential to do so, which by itself will put you in a position to set the trend for your competitors and while you’re at it position yourself on the market.Īssuming you’ve built a certain customer base and you’ve been successful when trying to present the value of your product, there’s good chance users will switch from your competitor’s products to your offer. This is probably the main reason why you’re considering setting low prices for your products or services. Some of the reasons why small eCommerce businesses may benefit from using a market penetration low pricing strategy: Increased Sales Volume Certain number of customers above the threshold.Successful implementation of cost leadership requires: One of the most used low price strategy models is the market penetration one, which we’ll take as our focus point in this article. Where economies of scale can be achieved.When the product has no competitive advantage.The strategy is employed most often in two cases: The goal of setting up a low price strategy plan is to trigger increase in demand for the product while the company manages to gain a certain share of the market. Low Price Strategy and Small eCommerce Businesses.