This is one of those myths that prompts many startups to create incorrect pricing structures right from the word Go. This in turn has a domino effect on the rest of the business, since it does not have the capability to produce the level of profit required to make the business viable. The fact of the matter is, having the lowest price does not always guarantee success. That is very far from the truth.
Think about it yourself, think about your personal purchasing decisions in the recent past. Were you presented with opportunities to purchase a lower priced product, but opted to go with something at a higher price? What were the reasons behind not choosing the lowest priced product?
Factors such as product design, quality of after sales service, purchasing experience, feedback from your peers, budgetary constraints and many other factors that culminate to form our final decision come to mind. All of these factors can be leveraged to provide a business with a substantial premium on it’s product/service as compared to the competition’s that is priced lower.
Lowering your price, and planning to make a profit by increasing sales volume, is in most cases not an optimal strategy. It position’s your business in the mind of the customer as a low cost vendor, along with the negative associations that come with this positioning. Think carefully about your pricing strategy. Remember, it is far easier to bring down prices rather than raise them in the future.