Competitive Pricing: When to Step Back and Focus on Value

A supply company representative recently took a call from a frustrated client. The client complained about a competing company’s aggressive “Delivery and Installation Special” and insisted that the rep step in and accuse the competitor of predatory pricing. While the rep understood the client’s frustration, he gently explained that pricing strategies of other companies were beyond his control. Instead, he shifted the focus back to what his company could offer—reliability, quality, and long-term value.

This scenario underscores a challenge that many sales reps and companies face: navigating the tension between competitive pricing and maintaining customer trust.

What is Predatory Pricing?

Predatory pricing refers to the practice of lowering prices so drastically that competitors struggle to stay in business, with the ultimate goal of monopolizing the market. However, it’s important to recognize that not all aggressive pricing tactics fall under this category. In this case, while the competitor’s special offer might seem overwhelming, it’s more likely part of a standard competitive pricing strategy, rather than a legal violation.

When It’s Time to Step Back

Clients, like the one in this story, may sometimes expect their account representatives to intervene in competitive pricing battles. However, as the rep in this situation wisely pointed out, it’s important to recognize what is and isn’t within the company’s control. Challenging a competitor’s pricing strategy is not only ineffective in most cases, but it can also shift focus away from what the company should be emphasizing: its own strengths.

When faced with aggressive competitor offers, sales reps need to handle the situation with professionalism and calm reassurance. Instead of getting drawn into the competition, it’s often more effective to focus on building strong relationships and highlighting what sets your company apart.

Focus on Value, Not Just Price

Here’s how companies can respond when competitors offer aggressive pricing strategies:

1. Emphasize Service Quality: Rather than engaging in a race to the bottom on price, focus on delivering superior customer service. Long-term relationships are built on trust and reliability, not just cost savings. Make sure clients know they can count on your company for dependable, on-time delivery, and seamless installations.
2. Highlight Product Value: If your company offers products of higher quality or longer durability than the competition, this should be a focal point in the conversation. When clients understand the long-term value they’re getting, they’re often willing to pay a bit more for peace of mind.
3. Leverage Customization: One way to stand out against a competitor’s pricing strategy is to offer customization or tailored solutions. Instead of focusing solely on cost, show your client how your company’s offerings can be adapted to meet their unique needs. Custom solutions often add value beyond simple price comparisons.
4. Discuss Long-Term Savings: While a competitor’s special offer may seem attractive, remind clients that short-term savings don’t always translate to long-term benefits. Your company might provide more cost-effective solutions over time, whether through superior product warranties, lower maintenance costs, or extended support.
5. Avoid Pricing Wars: It’s tempting to try and match or undercut a competitor’s pricing to retain clients, but doing so can damage your brand’s value and sustainability. Instead, focus on what your company does best—whether it’s unparalleled service, innovative products, or industry expertise.

A Diplomatic Response

In the case of the supply company rep, his response was a model of professionalism. By politely explaining that he couldn’t intervene in the competitor’s pricing strategy, he maintained his integrity and prevented an escalation. Instead of being drawn into the drama, he focused on guiding the conversation back to what the client could control—choosing a provider based on overall value, not just a short-term discount.

Preventing Future Client Frustrations

When faced with frustrated clients who are concerned about competing offers, companies can prepare by proactively addressing potential concerns. Here’s how:

• Regular Check-ins: Keep lines of communication open with clients. Regularly checking in with them builds trust and provides opportunities to address concerns before they escalate.
• Education on Value: Help clients understand the total value of your offerings. Educating them on quality, service, and the long-term benefits of working with your company can minimize the temptation to focus solely on price.
• Competitor Awareness: Stay informed about competitors’ offers. While you can’t control their strategies, being aware of the landscape helps you to frame conversations with clients in a way that emphasizes your company’s unique strengths.

Playing the Long Game

The lesson from this interaction is that companies need to remain focused on their value, even when competitors engage in aggressive pricing tactics. The rep in this case handled the situation perfectly by staying calm, gently explaining the limitations of his influence, and shifting the conversation back to what his company could provide. Ultimately, the goal isn’t to win a pricing war but to create long-lasting client relationships based on trust, quality, and value.