The Price Trap - Issue 54

How to Avoid a Price War

The problem with a price war is that even if you win a battle, it’s virtually impossible to win the war. There are exceptions to this rule. If you’ve got a substantially better cost structure than your competitors, then maybe there’s a win in there, but this is not a strategy that maximizes a site’s total return.

The secret is to change the playing field and move the discussion from price to one of trust. Customers certainly weigh many factors when selecting a site to purchase from. We all know we can find a crazy low price, but at some point we start to worry if the transaction will deliver to our expectations. Consumers typically will pay a premium for higher trust and confidence.

Trust doesn’t come in a bottle. Simply dropping a “trust logo” at the bottom of the page likely does little to move the numbers. The writing style, however, can play a big impact on overall trust.

Most content we see is “promotional” in nature and most consumers discount this content heavily. Imagine if the content was written in a truly honest “information” style that felt really honest. The copy doesn’t say this product is the “best” but focuses on the applications it’s good for AND the applications it’s not so good for. Admitting that a product isn’t perfect for everyone may do more to drive up your conversion rates than any other strategy you could deploy.

Will being honest cost you sales? Not likely, because even when you discourage a particular buyer you are building site-level trust and credibility. For everyone else, the balance in the presentation could be that little extra that drives up the conversion rate.