A recent article from Inc.com contributor Geoffrey James, \u201cEasy Trick to Avoid a Price War,\u201d offers this simple tip for pricing: Instead of lowering your prices to become more competitive, turn your competitor\u2019s lower price into a competitive disadvantage.<\/p>\n
\u201cIt turns out that when two products are virtually identical, people will buy the one that costs less. However, if buyers are exposed to a third product that costs more than either of the original two, people will usually pick the mid-priced product rather than the cheapest one,\u201d James writes.<\/p>\n
So, instead of lowering the price to match or beat the competition, offer three versions of your service at different price tiers, with the lowest one matching your competitor\u2019s price. The services don\u2019t even have to be dramatically different as long as you label them appropriately \u2013 Silver, Gold and Platinum, James suggests. This way, when a customer mentions your competitor\u2019s price, you point out that it\u2019s the same as your Silver package. By doing so, you\u2019ve positioned your competitor as the \u201ccheapie alternative.\u201d And the research shows that more often than not, the customer will opt for your Gold or even Platinum level.<\/p>\n