Is offering the lowest price the best strategy?

Posted on 23 August by Simon Gomez in Pricing strategies

Many companies use the low pricing strategy. By adopting this tactic, they think buyers will pick them over their competitors because they offer the lowest price on the market. Marketplaces like Amazon or Alibaba can continuously reduce the prices and enter a price war with small stores with no consequences. Meanwhile, small companies can't because if they do it, they will go bankrupt. Additionally, it turns out that cheaper is not always better. A study by Vanderbilt University showed that consumers see low prices as a sign of a low-quality product.

So, to respond to the question, is offering the lowest price the best strategy? The answer is: no, you need a pricing strategy to define that.

Having a price strategy is crucial for your company and yet hard to do. To create one, you need to have at least your competitors and products with their prices. If you already have one, it is an enormous job to manage it and execute it.

Also, you have to look at your competitors. Check what they are doing with their products and what they offer. Do not just look at the pricing. There are other reasons why people shop online. According to the GlobalWebIndex report published in 2020, free delivery was the top reason for shopping online. More than half (53%) of consumers list it as one of the main reasons they shop online.

Source: GlobalWebIndex report

But different factors influence the shopping habits of the customers. If you look closely, shoppers are looking for companies that offer value-added services.

PriceTweakers offers your company the best tool for pricing strategies and competitor monitoring. Having accurate data of your competitors is crucial for any pricing strategy. PriceTweakers takes care of that and provides your company with the best market insights with our real-time analytics and reports. With our dynamic pricing tool, you save time, and you can control your pricing strategy. And we have more features that can take your company to the next step. Are you interested? Contact us for more information.