Price Cutting Alternatives

Price Cutting Options

Many companies feel that price cutting is their best answer to increased competition. This answer has the unhappy result of treating your products or services as commodities rather than value-added products. Worse, it is likely that the price cut will not generate enough new sales to offset the loss in profitability per unit.

You may want to consider two other alternatives before you take the step of price cutting:

Try bundling two or more of the products or services together. Many times a lower bundle price with the same margins can be the result since your selling costs per sales dollar are lower. Also try bundling an obsolete product with a current product. You were going to have to have take a hit on the obsolete product anyway, but bundling it with a higher value product should allow you to avoid a deep discount.

Raise your price. Sounds scary, but many times you may find that your competition will follow your lead. This is especially true if you are the quality leader. Your competitors expect you to be the price leader as well.

If these two steps don't work, then you need to consider that the market place has spoken and your product is becoming a low value commodity. Finding a high value replacement for that product is now the priority. Failure to do so will result in perpetuating lower margins and profits.

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