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Showing posts from June, 2010

The Fallacy of Price

A common misconception is that if you lower the price you will get more customers.  This is not always the case by anymeans and there are some significant downsides to playing the price card which you should consider.

Now, you might not really have an option - if your competition has cut their price to some extent you will be forced to match this to ensure that you are not priced "out of the market" - however if this is not the situation and you are choosing to cut your price without any prompting from competitors or customers, there are reasons for and against this action.

Companies that pursue this strategy do so for a variety of reasons including the idea  that lowering prices will revive their customers' wavering devotion and ultimately make the company better off. To defend the cuts, they cite changes in the competitive landscape, the convictions of upper management, a willingness to share cost savings and productivity improvements with customers, and the mistaken bel…