Strategy Note 14: The Price Trap
Competing on price is a trap that feels like strategy.
The logic seems sound. Lower price removes objections. More accessible means more customers. You are making it easier for people to say yes.
But price competition only ends one way.
Someone will always go lower. There is always a competitor willing to cut margins, absorb losses, race to the bottom. If your only differentiator is being cheaper, you have positioned yourself in a race with no finish line except bankruptcy.
And the customers you attract through price are the customers most likely to leave for a lower price elsewhere. You have selected for price-sensitivity, which means you are building a customer base with no loyalty to anything except cost.
The businesses that thrive long-term compete on value, not price.
They charge more because they deliver something that cannot be compared directly to cheaper alternatives. The comparison is not possible because what they offer is fundamentally different—in quality, in experience, in transformation, in meaning.
They attract buyers who evaluate quality, not just cost. These buyers understand that expertise costs money. They are not looking for the cheapest option. They are looking for the right option and are willing to pay for it.
This is a fundamentally different customer relationship.
The price-sensitive buyer is always looking for a better deal. The value-conscious buyer is looking for a trusted partner. The price-sensitive buyer will leave when someone cheaper appears. The value-conscious buyer will stay because they value what you specifically provide.
If price is your primary differentiator, you have not yet articulated what else you offer that matters.
What do you do that cheaper alternatives do not? What experience, what expertise, what transformation, what relationship? What is the value beyond the deliverable?
When you can articulate that clearly, price becomes a signal rather than a barrier. Higher price communicates quality, expertise, scarcity. It filters for clients who value what you do. It positions you as premium rather than commodity.
This requires confidence. It requires believing that what you offer is worth more than the discount alternatives. It requires being willing to lose price-sensitive buyers in order to attract value-conscious ones.
But this is the only sustainable position. The race to the bottom has only one winner, and even they are barely surviving. The race to the top has room for everyone willing to do the work of being genuinely valuable.
Stay Curious,
