Nov 14, 2022
In the tough economy we’re in, we frequently see fierce price wars raging between companies. Business owners are tenacious, bullheaded, and ferociously competitive people. We want to win at all costs, and all the time. But winning a price war can be dangerous—when we’re not careful with our emotions, we can find ourselves trying to win a race to the bottom. So, when you see your competitors drastically driving down their product or service price, don’t lower yours just yet.
In this episode, I discuss how we should respond as business owners whenever we find ourselves in a price war. I explain the negative impact of lowering your prices on your business, profit margins, product or service quality, and labor power. I describe how Apple increased its product sales by creating differentiation strategies and how Chick-fil-A outpaced its competitors without lowering their prices. I also share some strategies to implement in your business when facing a possible price war and outline other alternatives to lowering the price of your product or service.
“Whenever you see yourself engaging in a price war, you don’t necessarily need to respond in kind—you can create a differentiation and still keep your margins.” - Justin Goodbread
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About The Financially Simple Podcast
If you are looking for a podcast that speaks directly to the challenges and puzzles of running a business, you’ve come to the right place. The Financially Simple podcast was built for you. With over 400 episodes and counting, our host Justin Goodbread covers a broad range of topics, from starting a small business, to prepping it for sale, to growing your personal wealth. Justin’s combination of analytical skills, tough love, and a healthy dose of experience delivers practical ideas that will benefit business builders at every stage of their business journey.
If you have questions, or comments for Justin, submit those at: https://financiallysimple.com/ask-justin/
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Financially Simple is a division of WealthSource Partners, LLC (“WSP”), which offers investment advisory and financial planning services. All investing involves risk of loss, including the possible loss of principal. Past performance does not guarantee future results and nothing in this podcast should be construed as a guarantee of any specific outcome or profit. All market indices discussed are unmanaged, do not incur management fees, costs and expenses, and cannot be invested into directly. Business planning services offered by WealthSource Business Advisors, LLC (“WBA”).
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