How To Undercut Your Competitors Price (And Still Make Money)

How To Undercut Your Competitors Price (And Still Make Money)

Posted on 11/22/2018
Neil Patel


Pricing has a huge impact on your business's growth rate. Make sure you're priced to compete. ►Subscribe: to learn more secret SEO tips. Find me on Facebook: Read more on my blog:

Do you know what one of the best strategies to beat your competition is? It's to undercut their price. I kid you not, I'll give you an extreme example of this. I have this marketing tool called Ubersuggest. I took what my competition's doing, I took a lot of their paid features, and I just released them for free. Now again, this is an extreme example because I'm taking something that most people are used to paying for and releasing it for free. Even though my tool had downtime because I had high usage and all this stuff, people didn't care.

They were so appreciative that I just released something for free that they just exploded, right? The popularity of the tool kept growing, it kept exploding, and people wanted to use it instead of paying 50 or 100 bucks a month to the competition.

The moment their patent ran out, they went from being a company that generated over $100 million a year in revenue to around $5 million. Why, because their competition created similar products at a much lower price point. Even if the product isn't as good, but it's close, and the price point is drastically less, people will be okay just because the cost is so much lower. Now, if you can take the philosophy of having a product that's equal or greater in value and charging less, you'll definitely win. But what I found is, the price is one of the easiest ways to grow, just start undercutting. What a lot of big corporations do is, they go to the extreme and all they do, they undercut pricing.

But they undercut it so much with their competition that they'll lose money on each transaction. And they're okay with that because, eventually, it'll cause all their competitors to die down and then once they control the market, they slowly can start increasing their prices. So you can figure out whatever pricing strategy is best for you, but I've found that in many cases, that if your price is lower, you can cut out your competition and cut a lot of their market share, win over those customers, and start growing at a much faster pace.

Now, there's a few caveats to these rules. For example, if you're selling diamonds and you undercut people by three X, a lot of people will believe that the quality of your diamonds are much lower. So when it comes to luxury goods, undercutting people with pricing sometimes can hurt you. But for anything that's typically not a luxury good or a high-end good, cutting price is the easiest way to overtake your competition.