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Pricing Strategy: Cut prices to compete with undercutting competition or not?
ES
ES
Edward Stephens, Director at Angel Investment Network Ltd answered:

I think it is really important not to erode value in the face of customers. A good friend of mine runs a company called Undeground Cellar that got taken onto Y-Combinator. The ethos is they are taking a novel approach to preventing price and brand erosion in the wine industry.

I realise yours is a digital product, but I would certainly think about tangibles you can offer before getting caught in a price war. Lots of studies have shown that something + free is perceived as more valuable (watch Robert Cialdini - 6 Keys to Persuasion) https://www.youtube.com/watch?v=cFdCzN7RYbw and just try to mix it up a bit.

At least that way you can always drop your prices later, but right really cool customer service emails or a really nice follow up to your customers. Something the big guns can't do - you would be surprised how loyal some customers will be.

Just my two cents.

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