How do I price my products when my competitors do not display prices on their website?
Question: My company provides training for more than 30 courses. There are 4 other companies which also provide the same courses but they do not show their prices on their website, they tell the price when a customer calls them. Till now whatever price I had shown on the website they used to charge 10% less than that. What should be my strategy now to increase my market share and revenue?
Answer: First, from the tenor of the question, it sounds like you believe that almost every purchase is a price decision. In other words, customers only purchase the lowest priced alternative. My first advice, is to stop believing that. Your company needs to create more value than your competitors. You can do this by offering more capabilities than your competitors, by delivering and proving higher quality, by building a better brand name, and even by better marketing. If your market believes you offer a truly better product, they would likely pay 10% more for it.
Second, if you believe strongly you are losing on price and you don’t want to, consider adding a price matching policy on your website. “We match all competitor prices.” This one policy has three great effects:
- Customers may come back to you if they find a lower priced competitor.
- Customers may believe you have the lowest price and won’t shop around.
- Competitors may stop undercutting your price because they know you will match their price. Competing on price just lowers everyone’s profits.
Third, considering raising your prices. If you really believe your competitors simply price at 10% below your published price, by raising prices you can raise industry profits (including yours). Then, you also have the ability to offer discounts to any customer who calls in to complain about price. Of course, if your competitors won’t follow you with higher prices, then you probably don’t want to do this.
Of all three of these, the first is the most important. Create value. Communicate value. Prove your product is worth more than your competitors.
Looking for the latest in product and data science? Get our articles, webinars and podcasts.