What is the myth that “lower prices always attract more customers,” and why is it problematic?

Many businesses operate under the assumption that lowering prices will automatically increase customer acquisition. While price sensitivity exists in some markets, this myth often leads to undervaluing offerings and eroding profit margins.

Why This Myth is Dangerous:

• 1. Pricing Affects Perceived Value:

  • Lower prices can make a product seem inferior or less reliable.

  • High-quality products with unusually low prices create doubt in consumer minds.

• 2. Not All Customers Are Price-Driven:

  • Many customers care more about quality, reliability, service, and brand reputation.

  • Price-sensitive buyers may also be disloyal and quick to switch.

• 3. Competitive Price Wars are Unsustainable:

  • Cutting prices to beat competitors often leads to a “race to the bottom.”

  • It reduces industry margins and discourages innovation.

• 4. Low Prices Can Hurt Cash Flow:

  • Small businesses especially need adequate margins to cover operations.

  • Undercutting prices may attract traffic but lead to financial instability.

• 5. Differentiation Matters More:

  • Brands like Apple, Tesla, or Starbucks thrive not by low pricing but by strong value propositions.

  • Features, experience, and service often justify premium pricing.

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