Why Being the Cheapest Isn’t a Strategy

By Jaci Russo | CEO & Co-Founder, brandRUSSO

There’s a wonderfully simple strategy available to any company struggling to differentiate itself: just be cheaper.

Your competitor charges $100? Charge $90. They drop to $85? Fine, make it $80. Keep going long enough and eventually you’ll win every deal while simultaneously wondering why none of them are profitable.

This is the problem with building your position around price. Unless your entire business model was intentionally designed to win through low cost, “cheaper” isn’t much of a competitive advantage. It’s an invitation to a race that gets less fun every time someone lowers the number.

And someone almost always will.

Price Matters, but It’s Rarely the Whole Decision 

Let’s be clear about something before every CFO reading this sends me an email. Price matters.

Customers have budgets. Procurement teams exist for a reason. Buyers compare quotes, evaluate costs, and occasionally stare at proposals as though one more minute of intense concentration will make the total magically decrease.

But price is usually one part of a larger decision.

Buyers are also thinking about risk, experience, expertise, reliability, service, convenience, speed, quality, reputation, and whether they trust your company to actually do what you said you would do. In B2B, the cheapest option can become very expensive very quickly if it creates delays, mistakes, downtime, unhappy customers, or a series of meetings that begin with, “So, we have a problem.”

Your job isn’t to convince buyers that price doesn’t matter. Your job is to give them enough value that price isn’t the only thing that matters. 

When Everything Looks the Same, Price Wins 

Here’s where branding enters the conversation.

Imagine a buyer comparing three companies. All three websites make roughly the same claims. Everyone has “unmatched expertise.” Everyone offers “industry-leading solutions.” Everyone is deeply committed to customer service, which is impressive considering how many of us have spent 45 minutes on hold listening to instrumental jazz.

From the buyer’s perspective, the companies look interchangeable. So what’s left to compare? Price.

Companies sometimes complain that customers are too price-sensitive without considering whether their own marketing has given those customers anything else to evaluate. If you sound like your competitors, make the same promises, offer similar services, and never clearly explain why your approach is different, you’ve practically handed the buyer a calculator.

Differentiation gives people another reason to choose. 

Discounts Can Become a Very Expensive Habit 

Discounting can absolutely make sense in the right situation. The problem starts when lowering the price becomes your default response every time a buyer hesitates.

A prospect says the proposal is expensive, so you shave a little off. Another asks whether you can “work with them,” which is business language for “I would enjoy paying less,” so you shave off a little more. Before long, your pricing strategy has become whatever number makes the conversation end faster.

That doesn’t just affect margins. It teaches customers something about your value.

If your price drops every time someone pushes back, buyers begin to wonder what the original number actually meant. Worse, your sales team can become so accustomed to defending price that they stop selling value altogether.

The conversation becomes about what you cost instead of why you’re worth it.

Value Has to Be Specific 

Of course, telling customers you provide “great value” isn’t much better than telling them you provide “great service.” Nobody knows exactly what that means, but everyone seems very confident about it.

Real value is specific to the problem your customer is trying to solve.

Maybe your manufacturing expertise helps reduce downtime. Maybe your process gets a new location operational faster. Maybe your banking team understands a particular industry well enough to spot problems before they become expensive. Maybe your professional services firm gives leadership confidence to make a decision they’ve been avoiding for six months.

Those are meaningful differences because they connect what you do to an outcome the customer cares about.

That’s a much stronger conversation than, “We’re 7 percent cheaper.”  

The Cheapest Customer Isn’t Always the Best Customer 

There’s another uncomfortable part of competing primarily on price: the customers you attract because you’re cheapest may also be the easiest customers to lose.

If price was the main reason they chose you, what happens when another company offers the same thing for less? There isn’t much holding the relationship together.

Customers who choose you because they understand your expertise, believe in your approach, value the experience, and trust your team have more reasons to stay. Price still matters, but it exists within a much larger relationship.

This doesn’t mean you can charge whatever you want and call it branding. I would love branding to possess that particular superpower, but unfortunately economics continues to insist on participating.

It means a strong brand helps customers understand what they’re paying for.

Focus Gives You Something Better to Compete On 

Focus is the first pillar of our Razor Branding™ process because you can’t create meaningful differentiation without deciding who you’re trying to matter to and why.

When you understand your ideal customer, you can stop trying to win everyone. You can identify the problems you’re particularly good at solving, the value you deliver better than competitors, and the reasons the right buyer should choose you.

That clarity changes the sales conversation.

Instead of asking, “How low do we need to go to win this?” you can start asking, “Are we clearly communicating why we’re the right choice?”

Those are two very different strategies, and only one gives you something you can continue building over time.

The Takeaway 

There will always be buyers who choose the lowest price, and sometimes that buyer simply isn’t yours. Trying to win every one of them can slowly turn your company into a cheaper version of itself.

A stronger strategy is to understand what makes your company worth choosing even when you aren’t the lowest number on the page. Build a position around the problems you solve, the experience you provide, the expertise you bring, and the value your customers actually receive.

Because if your best answer to “Why should I choose you?” is “We cost less,” you don’t have much protection when somebody else shows up costing even less.

And trust me, somebody eventually will.

Let’s change the conversation. 

Learn more about our Razor Branding™ process
https://brandrusso.com/razor-branding/

Or complete the market perception scorecard to get a clear read on how your market views you
https://brandrusso.com/mp-scorecard/

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brandRUSSO was established in 2001 by Jaci and Michael Russo, representing a global portfolio of B2B clients in the professional services and manufacturing industries. As a strategic branding agency, we believe in the promise behind the brand, and that by changing the conversation we can inspire and motivate consumer behavior.