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Estd 4.22.2023
Based on Price to Scale, you don’t necessarily have to match competitors’ heavy discounts or permanent free tiers across the board. Instead, you can justify a higher price by carefully differentiating on value and targeting specific customer segments.
Below are the key points from our book:
• Segment Your Market:
As discussed on page 245, it’s vital to segment your customer base. Not every customer uses your product in the same way, so while some users may be more price-sensitive, others will value advanced features or a superior user experience. This means you can offer targeted pricing or discount alternatives for those who need them—and maintain a premium for customers who value additional functionality.
• Differentiate on Value:
The book emphasizes that simply matching competitor discounts can lead to a race to the bottom. By innovating your product offerings (as noted on pages 267 and 285), you can create product lines that are distinctly different from competitors. This differentiation allows you to win over customers who are willing to pay a higher price for better or unique features, rather than forcing uniform concessions across the board.
• Creative Alternatives Instead of Unilateral Price Cuts:
The approach recommended focuses on proactive price reductions that are coupled with value enhancements (page 285). Rather than matching a competitor’s discount, it can be more strategic to offer a bundled upgrade or tie price reductions to longer-term commitments. This not only retains price-sensitive customers but also positions you as a customer-centric company without diluting your premium brand.
In summary, our pricing strategy book, Price to Scale, advises that while competitive pressures might compel you to adjust pricing for certain segments, a one-size-fits-all discount approach isn’t necessary. Instead, justify a higher price by emphasizing added value and thoughtfully segmenting your market to address varying customer needs.