You can be on Entrepreneur’s cover!

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.

Data & Recovery

Add Extra 20% Savings to This Complete CompTIA Course Bundle Through April 16

Give your IT career goals a boost with this low-priced package.

Leadership

The Unseen Reason You Feel So Overwhelmed — and How It Impacts Your Business

Feelings of tiredness and exhaustion are on the rise. Here are a few tips to combat the symptoms within your own business to boost productivity and employee morale.

Side Hustle

This Dad Started a Side Hustle to Save for His Daughter's College Fund — Then It Earned $1 Million and Caught Apple's Attention

In 2015, Greg Kerr, now owner of Alchemy Merch, was working as musician when he noticed a lucrative opportunity.

Cryptocurrency / Blockchain

From Idea to Lucrative Side Hustle — Why Bitcoin ATMs Are the Future of Currency Exchange

Bitcoin ATMs present a lucrative opportunity — the market is projected to grow to $16.85 billion by 2033.

Business News

This Futuristic Wearable Smartphone Alternative Projects a Screen on Your Palm — And It's Now Widely Available

Humane's Ai Pin fastens magnetically to clothing and becomes a voice-activated AI assistant that can make calls, send texts, take notes, and find answers to complex questions.

Business News

Wealthy Americans Are Getting Second Passports at Record Rates, According to a New Report

New data from law firm Henley & Partners found that Americans outnumber all other countries for having secondary citizenship.