How To Beat Your Competition Without Lowering The Prices: 6 Tactics

Trying to get ahead of your competition by lowering prices can be effective short-term, but in the long run, it’s a bad decision for you, and in fact, for the whole market. Thankfully, there are other ways to get ahead and outrun other competitors in your sector. And that’s what we want to discuss in this post.

Let’s talk about lowering the prices for a moment. What’s at the end of this road? Just two scenarios:

  1. You start making or providing worse products and services to make up for the lost profit.
  2. Others do the same thing, and you have to lower your prices again, ultimately leading to price wars.

In the first scenario, customers see the lower quality of your products, and they look for alternatives, buy less from you, or even abandon your brand altogether. Simultaneously, increasing the price again is extremely difficult (people get used to the lower prices pretty quickly) without aggravating and possibly even losing customers.

In the second scenario, all or the vast majority of competitors in the given market follow the same path, and the overall quality of your sector goes down. Plus, because of the price war, all players make less money than they should.

When is lowering the price a good option?

The short answer is when you’re new. When you want to start with a brand-new product or service, you need to get the first people (so-called early adopters) on board. In such a situation, lowering the price is your only option. This strategy is called penetration pricing, and even big players like Netflix use it.

Take a look at this chart provided by Statista:


When they were at the very beginning of their market presence, they needed people to sign up. That’s why the service was very cheap (less than $8 per month), and there was a free trial month available. Today, the free trial is gone, and Netflix is almost twice as expensive. That’s what market penetration is all about. But as you can see on the same chart, Netflix was raising prices gradually and regularly, so it was a short-term strategy, not the vision for the company’s final pricing.

There is one more scenario where lowering the prices makes sense. It’s called price skimming, and it’s all about replacing an old product with the new one. The electronics world is a perfect example. At first, DVD players were very expensive, now you can buy one for less than $100. It’s the same story with other products that become outdated and, as a result, less popular.

If not lowering the price, then what? 5 tactics you can use

In many situations, the price is very important, but it’s not the only factor that customers pay attention to. You can use other factors to tip the scales in your favor. These factors comprise:

  • Your USP
  • Strong brand
  • Exceptional customer service and CX
  • Niche product
  • Strategic partnerships

Let’s have a closer look at them.

Your USP

This acronym stands for unique selling proposition. In short, that’s what makes you stand out from your competition. If your brand promises some exceptional or non-standard value, you can raise your prices. This is called value-based pricing, and it’s very common across all premium and luxury brands. Think about it – are Hermes handbags more functional than the ones you can find at Walmart? Not necessarily, but that’s not the point. Hermes offers something more, and therefore, they can price their product accordingly.

We’re not saying that you have to be the Hermes of your sector, but what you should do is look for a specific distinguishing feature. Perhaps it’s the way your products are made? Or maybe you offer an extended and broad warranty? Or provide customers with broad customization options? All of that can be a good USP and, therefore, a good reason not to lower your prices.

Strong brand

Building a strong brand is always a good marketing strategy. A strong and valued brand enables you to dictate your terms. Think of Mercedes, for example. Their cars are not cheap because they are known for the high quality of their vehicles. Mercedes will likely never decrease their prices because they don’t have to. There will always be people who will want to buy a Mercedes and not any other car. That’s what a strong brand is about.

And one way to build a strong brand is by providing fantastic customer service and CX.

Exceptional customer service

Selling high-quality products is one thing. Taking care of your customers is the other. Make sure every customer feels taken care of in your company. It starts with a well-designed and easy purchasing process. Good customer service is also about providing diverse communication channels and assisting customers when they need you, as quickly as possible. 

Good customer service is indispensable to achieving excellent CX (customer experience). We discuss this question further in this article on the Dealavo blog: Customer loyalty in your e-commerce – how to do it.


Target niche markets

If you can make your offer tailored to a specific target audience or niche, you don’t have to worry about lowering your prices. That’s because you will likely have fewer competitors, and customers are usually willing to pay more for a tailor-made product/service.

Think of chef knives, for example. Again, the same question – can you cut meat and tomatoes with ordinary knives? Sure you can, but chef knives are designed specifically for professionals; they are sharper, lighter, and more resistant. And that’s worth the higher price. 

If you don’t want to lower your prices, think of targeting a specific segment/niche and create a product just for this segment.

Form strategic partnerships

The essence of forming strategic partnerships lies in the synergy that arises when two or more entities pool their strengths to create a sum greater than their parts. Collaborations can take various forms, such as:

  • Co-marketing initiatives
  • Joint product development
  • Shared distribution channels
  • Cross-promotional campaigns. 

By forming a strategic partnership, your company can tap into new markets and reach all-new target audiences. Think outside the box and come up with creative ideas of companies that you can partner with to achieve the synergy effect. A good example of such a partnership is Apple and Nike. Back in 2016, both companies launched Apple Watch Nike+, a smartwatch designed specifically for runners and athletes.


Can you come up with a similar idea? It doesn’t have to be a big collaboration between billion-dollar companies, but if you can think of a cooperation idea that’s beneficial for both you and your partner, it’s definitely worth looking into it.

In this post, we’ve mentioned five ways of getting ahead of your competition without lowering your prices. But there is one more option you can benefit from as well, and that’s our backyard.

Use your secret weapon – a price monitoring tool

Monitoring prices enable you to identify products that can be offered at higher prices without damaging your market position. Our tool can also help you identify products that should have their prices adjusted. Even if we’re talking about cents, the economies of scale will make a difference at the end of your fiscal year. Dealavo tracks your products and prices but also your competitors’ offers, including their prices and product availability. As a result, you can optimize prices in your store, sell more products, and even give your ROAS a boost (we have a separate tool just for that!).
Moreover, you can benefit from our most advanced tool – dynamic pricing and put your pricing strategy on auto-pilot. Do you want to know more? Book a demo of our platform today!