Competing on price is a bad idea unless you can substantially change the cost model.
If you're competing on price you'll have a much smaller margin and you'll get the worst customers.
When your competitors innovate or increase spending (on talent, marketing, etc.) you just won't be able to follow because you won't have the margins.
On the other hand if you can shift the costs of business then that can be a very strong competitive edge, as you can have higher margins at the same price point as your competitor.
Comments
Competing on price is a bad idea unless you can substantially change the cost model.
If you're competing on price you'll have a much smaller margin and you'll get the worst customers.
When your competitors innovate or increase spending (on talent, marketing, etc.) you just won't be able to follow because you won't have the margins.
On the other hand if you can shift the costs of business then that can be a very strong competitive edge, as you can have higher margins at the same price point as your competitor.