It easy to compare yourself to your closest competitor and say “I can do it better” or “I can do it for less”. But what makes you think you can do it better or cheaper then the incumbent who’s been at this game far longer than you have? You better have some “secret sauce” at your disposal that your biggest competitor doesn’t have and can’t easily replicate.
Don’t settle for the same but cheaper or better. Instead, change the rules of the game. For example:
- If your competitors’ software is overkill and complex offer a simple “no frills” version, e.g. Basecamp vs. Microsoft Project
- If your competitors’ offer a usage-based service, offer a flat rate instead, e.g. old long distance plans vs. new long distance plans
- If your competitors’ offer a low entry fee and but then over-charge for add-ons, charge a higher base rate and then offer the add-ons for free, e.g. TELUS, Bell and Rogers vs. Globealive wireless
- If you competitor makes money from advertising, offer an ad-free service and charge for the service instead
Don’t simply settle for offering the same thing your competitor offers – change the rules of the game.
I concur. I had a recent situation where I was selling a product which had already been quoted by my competition. I had a moment of doubt when about to quote, do I discount to beat the competition? Am I charging too much? However, in this case, our price model was sound and we got the sale. So I think it’s far better to find something you can do well and define the game rather than chase the competition around on their turf.