How to deal with competitors offering 10x lower pricing?
We started to see some competitors approaching our clients and offering extremely low pricing . What should be our strategy to keep our clients?
We started to see some competitors approaching our clients and offering extremely low pricing . What should be our strategy to keep our clients?
I'd check out what those competitors are really offering and identify your differentiators. Are they really offering the same quality and service for 10x less?
In this case, they're 2 people team. They offer 60-80% of the features.
Also, we started to see something similar with VC backed companies. They're low balling our clients to dominate the market.
If you're in a new or rare market, chances are the first players will be able to command a premium. Slowly, the market moves down & commoditizes until a fairly even playing field is reached.
There are two ways to play this game: either match the pricing wars, keep your clients, and suffer lower margins in favor of volume - or provide so much higher value and quality that your clients will keep paying a premium for you.
We're in a pretty old market. We work with membership based organizations. Clubs, associations, non-profits etc.
It feels like there are 100+ different companies with building out similar functionality. The older they are, more features they have.
If the market is trending towards a certain direction, it's inevitable that cheaper alternatives will pop up. Either they're sustainable or they aren't. If they're sustainable then you'll eventually need to match their pricing. If they're not sustainable, you just have to wait them out.
The market will always win - you just have to know where the market is going.
This comment was deleted 3 years ago
Definitely a challenge. In that case there are options. They may not be pleasant, but there's always options.
If that's the case you have to look at an underserved niche where you are adding functionality that is important and valuable to them--and that they are willing to pay for because they recognize the value.
Do they have economies of scale or scope that you don't have?
Or are these "get acquainted" offers.
I am assuming your clients are asking you to match the price. If the competitor is offering fewer features at a lower price you might want to consider making that same offer: lower price for fewer features.
One of them got $50M investment recently. They've onboarded alumni orgs around the world charging anywhere between $1,000 - $100,000 / year.
Other one is just a cheap clone with similar functionality. We offer 75% discount for non-profits but still it doesn't cut it. Our prices end up 3x higher...
It might be time for us to introduce $7/mo plan.
Another approach is to narrow your focus to a niche that is willing to pay more and serve them very well. You cannot be all things to all people.
The other risk is that not everyone may value all of your feature set: for those who see the value in one or more features you end up of having to "buy it back." If you look at the competitor and see fewer features there is always the possibility that it still represents a "whole product" for some set of prospects.
You may need to revisit who your target customer is, what critical business problem you are solving for them, and how your features map to measurable benefits.
I would hone in on the features that you have that they don’t or features you know your product is better at that you can back with numbers or testimonials.
Once you find those, concentrate only on reaching the audience that cares about those features
Sorry this isn't a helpful comment but how are they finding your clients?
To be honest, it is not rocket science to find a companies clients.
etc.