While coming quite close to late-paying clients, having a competitor who offers the same services as you at a lower price can be a threat to your cash flow. If they play their cards right, they might just turn your customers to their side through some price incentives, making you go out of business. The common approach to dealing with competitive pricing from other related businesses is to lower your price, but this can turn out to be counterproductive at times.

Reducing your prices to counter moves by the competition often results in pricing wars, and there are barely any winners in pricing wars, only survivors. While you might succeed in making your competitors run out of business, you might barely have any business left during the aftermath. Instead, there are wiser ways to approach this issue.

Here’s how to win in competitive pricing:

Start By Knowing Where You Stand

Before deciding to send a lower invoice to clients, understand where you stand on the competition curve. Creating a winning pricing strategy all trickles down to how attractive your services are to your customers. With more appealing services, you can have pricing power over your competitors. Ignoring the low prices of your competitors will barely have any effect on your market share or cash flow as clients are already hooked to your services.

On the flip side, if your services are a little bit disadvantaged in terms of appeal, then you might have to adapt to the new price changes by the competition, or else cede market share. To avoid this, every aspect of your pricing strategy needs to speak of value. With a head start in market pricing, you should invest in tools that help you run your business better and save time, such as Freshbooks’ templates: free downloadable invoice templates that will impress your clients and ensure you’re paid faster.

Consider Changing Product Design

You will typically have two options to fortify your market position: Improve your product or services or increase your price. In case you choose the former, then taking a look at your product’s design can be helpful. Customers will always feel drawn to products that have an amazing design that either touches their emotions or social status.

For instance, Volvo vehicles have held onto their market share since they have a history of producing some of the safest cars in the world. Find out what makes your customers get drawn to your services or products and tweak it to their favor. For example, in case you sell leather bags, adding a feature that makes the bag look upscale will be a win for your business.

Focus On Lean Management

 Lowering your price is still an option to retain market share and fortify your cash flows, but it has to be in a way that doesn’t affect your profit margins. It should be your priority to have your business standing in case lowering prices results in a price war. One great strategy to use would be to focus on lean management where you eliminate wastage in your production process.

You might be surprised by the cash that gets lost in the name of waste. While competitors lower prices using unfound strategies, you can still win the war even though they look like they are winning. For instance, you can choose to use smart time supply chain strategies to eliminate your warehousing costs.

Offer a Hassle-Free Experience

Sometimes all you need is to conduct a competitive analysis to win the pricing war. Customers will always appreciate items that are hassle-free to purchase and use. For instance, a customer will feel drawn to a company that offers free product delivery.

Pay attention to what customers do not love about your competitor’s services and make the necessary changes in your business. Looking into the loopholes in your business could also help offer a better customer experience. Think in the line of diversifying payment options, improving delivery and offering discounts for certain amounts of purchases.


Price wars can easily bring down businesses, but this is not to say that you can’t turn into a winner. It all depends on how well you can analyze the competition and adapt. Consider the tips above to protect your cash flow.