I just got an angry customer from a client. She wanted me to convince her business partner that the best way to grow their resort was to lower prices.
When I responded that perhaps she ought to consider raising prices and using the extra money to create a remarkable experience, she got really angry with me. Of course, I refunded her consulting fee.
Here is what I think:
Cheaper is the last refuge of the person who is not a very good marketer.
Cheaper is easy and cheaper is fast and cheaper is linear and cheaper is easy to do properly, at least at first. But cheaper does not spread the word (unless you are much cheaper, but to be much cheaper, you need to be organised from the ground up, like Capitec Bank, Kulula.com, to be cheaper). They are, you are not.
Cheaper is a short term hit, not a long term advantage. Cheaper does not create loyalty, because the competitor can always figure out how to be cheaper still, at least in the short run.
Even free is not cheap enough to win in the long run. Not if your competitor can figure out how to match what you have, then you lose your advantage.
So, if you can’t be cheaper, at least be better.