Why predatory pricing doesn’t benefit anybody in the long run

Let’s talk about predatory pricing. This pricing strategy is becoming a more common tactic for new businesses and freelancers who are just starting out. Although it’s easy to want to do whatever you can to gain clients, charging stupidly low prices just isn’t the answer and ultimately doesn’t benefit the consumer or the business in the long run.

I keep seeing so many people offering marketing and social media services for lucratively low prices online. Being so public about having such low prices can plant a seed into a consumer’s head and lead them to believe that £10 is an acceptable price to pay to have a five minute IGTV video filmed. If your competitors get hold of your prices then they might be tempted to charge even less than you are. This. Undercuts. Everyone. In. The. Industry.

Why is this this ‘strategy’ so damaging?

The consumer

When companies undercut other people in their industry and offer dramatically low prices, chances are the only reason they can afford to charge so little is because they’re providing people with a sub-standard service. The consumer may be getting a cheap deal but they’re more than likely not paying for a high quality service.

The sad reality is that if you’re paying for a service and the price seems too good to be true then it probably is.

The freelancers and businesses 

As soon as people start undercutting others, people and businesses who may be highly skilled and have years of experience will end up losing clients and money. This is damaging to these people as consumers are often tempted by predatory pricing tactics and ridiculously low prices. Try to remember that behind any freelancer or business that’s worth their money is a person or team of people that have invested time and money learning how to become good at what they do and provide the best possible service.

The businesses offering predatory prices

People that use this pricing strategy won’t make any real money or have any good chances of client retention in the long run. People will soon realise that the prices that these businesses are charging reflect their inexperience or the lack of quality in the service they’re offering.

I actually came across a marketer on Instagram the other day who was offering 60 day social media content plans for £20 for businesses. If you’re thinking of offering prices like this then either:

A) You’re charging a lot less than what your product or service is worth. Do some market research and talk to people in your industry to get a feel for what your work is actually worth – it’s probably worth quite a bit more than you think it is. For example, if you’re selling handmade Christmas cards, have a scroll through Etsy to make sure you’re not charging too little for your items compared to everyone else. If someone questions your pricing or tells you that you’re too expensive, feel free to kindly explain to them that they get the quality they pay for. Know your worth, girl!

or

B) The product or service that you’re offering isn’t very good and is a reflection of your pricing. I’m not saying this to be mean or because I don’t want your business to be profitable. I’m saying this because it’s not fair to sell sub-standard products to people. If you think that your work isn’t worth very much then your next move should be to ask yourself why this is. Identify what you need to do to improve the service or product you’re offering and then value your business enough to charge an appropriate price.

As always, thank you for reading!

I’m curious – let me know your opinions on this pricing strategy in the comments.

Ways you can reach me:

Bye for now,

Courteney x

 

24 thoughts on “Why predatory pricing doesn’t benefit anybody in the long run

  1. This is a problem dentists (and business owners) like myself, endure here in the Philippines. I’m not business savvy, so I didn’t know the term but reading this–I can totally relate.

    Healthcare here in my country is not so good and the truth is that people do not prioritize their health, much more their teeth. And so here comes the predators. I’ll just give on example.

    There are clinics who offer Orthodontic Treatment (braces) at very low prices. They’re too low. I refuse to take my price to their level, and that’s resulted in a decrease in patient volume going for Orthodontic Treatment at its standard price.

    It’s really hard to compete with predatory pricing. It cheapens the industry and lowers the standard of treatment. I’ve hoped for the Philippine Dental Association to do something about this, but this has gone on for too long.

    1. It’s a shame that other practices are offering such low prices because it’s so damaging for their competitors. Well done for not giving in and sticking to the prices you deserve to charge!

  2. Anything that is predatory is bad news. Just offering low prices instead of offering a worthy price isn’t benefiting the customer, it is hurting them.

  3. Loved the post and the issue described. We need to create values first, disclose things, make our information transparent. There’s nothing wrong with it. It shows that we are relatable and very much human vs. a stoic business or company that does not show a human face.

  4. First time for me to hear about this term and I totally understand that predatory pricing is happening in reality not only in big businesses but also in small businesses.

  5. You are right! This pricing is increasing so much in business industry. And there’s a lot of people making sacrifice on their business. Thank you so much for making everyone aware on this happenings.

  6. Love that term, it really fits the way businesses do this strategies, to gain more customers. It’s not really good for the industry.

  7. Predatory pricing is horrible. I feel it targets naive or vulnerable people its not an ethical way to have digital services.

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