Why Competing on Price is a Dangerous Internet Business Strategy

A mistake that I see a lot of internet business owners making, myself included, is to implement a business strategy based on price competition. In this soft economy, we think that the best way to get people to notice us and buy our stuff is to make sure that we have the lowest prices around.

We figure that with less income, people are moving toward frugal lifestyles that involve cutting back on the fluff; things that are nice to have but, since they are not necessary for survival, can be sacrificed for the sake of a healthy budget.

Faced with dwindling profits, we take a hatchet and slash prices hoping the deep discounts will entice customers back to our websites to buy. While this may seem like a good idea on paper it is actually counterproductive to building a successful internet business.