How to Beat Lower-Priced Competition

by Stephanie Christensen

3 min read

Do you spend more time justifying, worrying about, or haggling with customers over price than on demonstrating your actual value? If the answer is “yes,” it’s time to go back to the drawing board — no matter how long you’ve been in business — and figure out what your company stands for, says Terence Kam, founder of eStrategyPro, an internet business consultancy.

Marketers refer to what sets your enterprise apart from the competition as your “unique selling proposition,” and it’s the key to beating lower-priced rivals. Here’s how to formulate a USP (or a brief mission statement) that ends the price wars: 

  • Take a stand for something. There is one guarantee in business: If you are successful, a competitor will find a way to replicate your success at a lower cost, and price-sensitive customers will buy from that competitor just because it’s cheaper. Competing for that type of customer puts you in what Kam calls the “commodity hole,” and it’s not a place you want your business to be. Ever. Defining, and sticking to, your business’s USP is the key to avoiding it. If you don’t have a USP or it’s weak, now is the time to research what your competition really sells to customers, evaluate who has a well-defined USP, and formulate your own. A true USP has almost nothing to do with a product and everything to do with an emotion, a lifestyle, or a convenience. Take, for example, It’s one of hundreds of thousands of online retailers, manufactures no proprietary products, and isn’t the cheapest option. Why does it win the online retail war? Because its USP isn’t about merchandise; it’s about customer service (which Zappos delivers).
  • Understand your customers. Understanding why existing customers buy from you can help to formulate a strong USP. Ask your customers outright, “What do you like about us?” Constantly monitoring online data and seizing opportunities to learn more about your customers can give you invaluable insights, too. Craig Bloem is the founder of, a “try for free, then buy” logo service which competes against low-cost industry giant Vistaprint. Despite offering logo services for twice the price of Vistaprint, Bloem’s small business has grown from 148,000 visits in February 2011 to more than one million visits in June 2012. He credits that success to monitoring and analyzing online data and conducting ongoing “test and learns” on his site to understand how to better serve customers. When web data for his “beauty and massage” logo service category revealed a low 1.7 percent conversion rate, the company surveyed users to find out why. Findings revealed they did not have the “right” logo concepts in the customers’ eyes. In response, “added hundreds of new logos based on customer-stated needs, and increased the conversion rate to more than 50 percent,” says Bloem.
  • Invest in your USP.  Truly committing to a USP may mean re-evaluating existing relationships. For instance, Kam points out that if your USP focuses on quality, you probably can’t source products from the cheapest vendors. If your USP promises customer service, you’ll need to invest in additional resources that deliver on that, such as expedited shipping and “always on” customer care. Bloem says that strategy has paid off, giving him a fighting chance in the David-and-Goliath price battle. “While some competitors offer logos that look like clip art, we work with high-end designers to create logos that give small businesses a real brand,” he explains. “Our high-quality logos have allowed us to charge double what our larger competitors charge.”

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