⚡ Get All Content for 20% Off ⚡

Don't Be the Cheapest, Be the Best When pricing your product or service, instead of sweating the pennies, look at how you can charge more by offering a better quality experience for your customer.

By Mike Templeman

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Often, founders are worried about how they price their product compared to their competitors. They will find out what everyone else is charging and price their product towards the bottom end of the price range. Their reasons for doing this is they want to be competitive and ensure their price isn't a hurdle for potential customers.

Yet, I caution that pricing low is a strategy they should implement. Let me explain why.

Related: Why Customers Become More Loyal After Flirting With Other Brands

Someone can always be cheaper

When dealing with the price of a good or service, new companies need to understand that there can always be a cheaper option. Regardless of how cheap they go, their more established competitors can choose to price their good or service lower than the new company. The competitors have established brands, usually more cash on hand, and are often willing to lose a little money in the short term to price out the competition.

Don't get into a pricing war with your competitors. Instead, offer something better than them.

Related: The 4 Types of Competitors That Brands Must Battle

People are willing to pay for quality

"We know we're not the cheapest option in the market, but we make up for that by providing our clients with once in a lifetime experiences and providing them with the best guides and programs," says Mike Brcic, the founder of Sacred Rides, a mountain bike tour company based out of Toronto that was recently ranked the mountain bike tour operator by both National Geographic Adventure and Outside Magazine.

He's very aware that they're not the lowest-priced option in their space but also understands that his customers are ready to pay for an amazing experience and because of that, his company has grown aggressively for the past few years.

Make more money selling one item than selling one hundred

Similarly, Rob Alday, the co-founder of Abode, a luxury property management company that specializes in high-end ski lodge rentals, decided to eschew the low end of the market to focus on lower volume and higher margins.

"Our rentals are not for everyone, and I'm alright with that," says Alday. "This just means that we're better able to focus on our core audience and this makes our marketing efforts easier and keeps our customer service requirements at a minimum."

Alday, like many other entrepreneurs in the luxury market have avoided pricing wars altogether and instead focus on a small segment of the market. This helps with marketing, infrastructure, growth, and overhead costs. Plus, he never has to nitpick over a dollar here or a dollar there when looking at his competitors.

So, the next time you're considering how to price your product or service, instead of sweating the pennies, look at how you can charge MORE by offering a better quality experience for your customer. You'll be shocked at how much less stress is involved with pricing up instead of pricing down.

Related: Why (and How) You Should Befriend Your Competitors

Mike Templeman

Writer and Entrepreneur

Mike Templeman is the CEO of Foxtail Marketing, a digital-content marketing firm specializing in B2B SaaS. He is passionate about tech, marketing and small business.  When not tapping away at his keyboard, he can be found spending time with his kids.
 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Business News

Costco CFO Reveals Uncertain Fate of $1.50 Hot Dog and Soda Combo

CFO Richard Galanti reveals that the price will stay the same — but only "for a while."

Business News

The Most Unexpectedly Popular Side Hustle of the Decade Has Low Startup Costs and High Markups

A new report shows that vending machines are a popular investment — and the industry is set to grow up to $3 billion by 2031.

Marketing

Ever Wonder Why Certain Websites Rank Higher Than Yours? This SEO Expert Reveals The Secret to Dominating Search Results

It's often the smart use of SEO, now supercharged with AI, particularly in keyword optimization.

Business News

AI Is Impacting Jobs. Here Are the Gigs Affected the Most, According to an Analysis of 5 Million Upwork Postings

The researcher said in the report that freelance jobs were analyzed first because that market will likely see AI's immediate impact.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.