Why Trying to Lower Your Prices is a Waste of Money
And what you need to do instead that actually increases your chances for success.
Cover photo by Isabel Garger on Unsplash.
It can be tempting to think that lowering your prices will attract more customers. After all, who doesn't love a good deal? Despite this, this approach often backfires, leading to reduced profits, a diluted brand image, and a long-term struggle to get your business back on track.
Let's go through some reasons why slashing prices is a waste of money — and, more importantly, what you can do instead to increase your chances of success.
Lower Prices Undermine Your Brand
When you reduce your prices, you send a message to potential customers: "I don't think my product or service is worth the original price". This can undermine your brand's perceived value and make it harder to sell at full price later on. People may begin to associate your offerings with discounts, waiting for sales or promotions rather than paying what your creations are truly worth.
For example, if you're a fashion designer and constantly offer discounts, you're training your customers to see your clothing as "budget" rather than high-quality, original pieces worth investing in. Over time, this devalues both your brand and your work.
What to do instead
Focus on creating and communicating value. Highlight the benefits and unique aspects of your products or services that make them worth their full price. Whether it's craftsmanship, expertise, or the personalized experience you provide, make sure your customers understand the true value they're getting from your offering and overall brand promise.
Price Wars Lead to a Race to the Bottom
Competing on price alone sets you up for a race to the bottom. There will always be someone willing to undercut your prices, whether it's a larger competitor with lower costs or a business trying to gain quick traction. In this situation, no one wins — except maybe the bargain-hunters who aren't loyal to any brand.
When you focus solely on offering the lowest price, you shift attention away from what makes your product or service unique and valuable. This doesn't just hurt your bottom line; it also diminishes your brand's identity in the marketplace.
What to do instead
Instead of joining the price war, offer the highest level of intangible value and invest in building a premium brand. Stand out by offering something your competitors can't: exceptional service, a unique customer experience, or a product that's truly one-of-a-kind. For example, if you're a photographer, emphasize how your attention to detail, artistic vision, and personal connection with clients lead to photos they'll cherish forever. People are willing to pay more for an experience they can't find elsewhere.
Discounting Limits Long-Term Growth
While cutting prices may lead to a short-term sales boost, it can limit your long-term growth and prosperity. Once customers associate your brand with discounts, it's difficult to pivot back to full prices without resistance. You may find yourself stuck in a cycle where you're constantly lowering prices to maintain sales volume, but your margins — and business — are shrinking.
Instead, building a reputation for quality and consistency allows you to grow sustainably. Customers who recognize the value you provide will return for repeat purchases, not because they're getting a deal, but because they trust your brand and the results you deliver. Never underestimate the power of trust!
What to do instead
Develop a strong value proposition focusing on what makes your offering worth the investment. Communicate this clearly in your marketing, website, and sales conversations. Educate your customers on the benefits of paying full price — whether it's longer-lasting quality, personalized attention, or the sense of pride they'll feel owning something special.
Discounting Doesn't Add Value
If you're tempted to lower your prices, take a step back and ask yourself how you can add value instead. For example, could you offer a more personalized experience or include a bonus that makes your offer even more irresistible? Remember, you have the power to shape your business's pricing strategy in a way that adds value and maintains your brand's integrity.
What to do instead
Here are some strategies worth considering:
Bundle complementary products: If you sell handmade jewelry, you could offer a matching bracelet as part of a set. Customers feel they're getting more for their money without you having to lower prices.
Offer added support or expertise: If you're a consultant, provide an exclusive workshop or bonus resources to accompany your services. This enhances the value of your offering and sets you apart from competitors.
Create a loyalty program: Reward loyal customers with perks that make them feel appreciated, like early access to new collections or members-only events. This builds long-term relationships and keeps customers coming back.
Leverage your personal brand: If you are a creator and enjoy being recognized as such, work to build a personal brand that complements your current brand, activating synergies.
The bottom line: price isn't everything.
When it comes to running a successful business, price isn't everything. In fact, it's often far less important than the value your customers perceive in your products or services. Trying to compete by offering the lowest price will only undermine your brand and limit your potential for growth and prosperity.
Instead of lowering prices, focus on what really matters: the value, quality, and uniqueness of what you offer. Communicate that consistently to your customers, and you'll find that people are willing to pay more for an exceptional experience—one that no discount can replace.
Francesca – Armonica Studio
Francesca is the creator of Armonica Studio, a marketing consultancy focusing on strategy and communication. She is a Brand Strategist, a Communication Consultant, and the creator of The Armonica Blog: Marketing Insights And Actionable Tips For Creators And Makers. She currently lives in Berlin, Germany.
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