Smarter Pricing: How to capture more value in your market

If you have to fight, punch hard, once

Sometimes a price war cannot be avoided. For example, when a predatory competitor challenges the core business. An Internet auction is effectively a price war in a technological context. A buying company provides a specification and invites potential sellers to bid against each other in a real-time Internet auction. This has all the characteristics of a price war, and if there is no other way to gain business, it must be endured.

When all other options have been exhausted, direct head-on competition in a price war is the last resort. In these circumstances, the recommendation is to fight hard. This means getting to the bottom fast. Salami-slicing prices in an ongoing downward spiral simply teaches customers ...