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Not sure if you are aware, but matching competitor prices is actually anti-consumer. It's counterintuitive but it means that your competitors won't lower the pr
by zzleeper 7y ago
Not sure if you are aware, but matching competitor prices is actually anti-consumer. It's counterintuitive but it means that your competitors won't lower the price on the first place. Kinda like implicit price fixing.
- dymk 7y agoIt's actually not - if a competitor thinks it can sell more widgets at a lower price and make it up in the increase volume, they will lower the price. If that's the price which maximizes revenue for them, they'll leave it. It's straight forward supply and demand.
- sokoloff 7y agoI agree it’s anti-consumer in some significant ways. I think of it as not competing as vigorously as you could on price, by publicizing that for the consumers who are willing to do extra work, that you’ll eventually honor the best price they found at a qualifying competitor, but that you’re not going to be the one who initiates the first salvo in the price war.
- ALittleLight 7y agoIt's competing as much as you need to to make the sale, not competing as much as you can.
- kortilla 7y agoYou’re gonna have a bad time in business if you think the objective is to lower the price as much as possible without regard for what the market is paying.
- sokoloff 7y agoIndeed if I thought that, which I see no evidence to suggest that I do.
- bo1024 7y agoI don't think this argument refutes the previous point (which I found surprising, but I think is a good one). Normally, if a competitor lowers prices to undercut me, they will sell more widgets because people will switch to them. But with price matching, they know they won't sell more widgets (because people won't switch), so they keep their price high, which enables me to do so as well. This is of course a very stylized/idealized argument, but I think it's a good point to consider.