It might be that low prices are the final refuge of an entrepreneur who has run out of ideas and is left with nothing but a commodity. Most entrepreneurs who are not willing to work on their value proposition, lazy to come up with an innovative and appealing business model tend to use lower prices as the easiest way to compete.
Or it might be that organising your business around lowering prices through efficiency, mass scale and smart choices is a powerful way to grow.
My guess is that both are true, but you better be really sure about which one you’re choosing.
Hint: doing the second one (organising your operations around lower prices) successfully is really quite difficult, so if all you’re doing is writing a lower number on the price-tags, you’re probably playing the first game (easiest and laziest way to compete).
Anyone can make it big by discounting and giving things away. Few become spectacular by putting out EPIC products and services.
But the problem with the race to the bottom is that you might win. You might make a few more rands for now, but not for long and not with pride.
Someone will always find a way to be cheaper or more brutal than you.
The race to the top makes more sense to me.
The race to the top is focused on design and respect and dignity and guts and innovation and sustainability and yes, generosity when it might be easier to be selfish.
It’s also risky, filled with difficult technical and emotional hurdles, and requires patience and effort and insight. The race to the top is the long-term path with the desirable outcome.
The fact of the matter is that lower pricing doesn’t work all the time. What happens when your competitor lowers her prices to match yours, then what? Are you going to lower your prices again?