So your competitor has started to rapidly cut down their costs, and now the office is scrambling to their battle stations for a full out price war. But hold out just for now, because starting a tit-for-tat skirmish may only result on casualties on both sides.

Often a competitor will want to raise their prices because they want your market share, muscling you and others out of business. This kind of aggressive expansionist attitude is something we see far too often in the Recruitment sector and it can leave some companies panicking on what they should do next.

This competitive battle for market share through the weapon of price is mostly coined as a ‘Price War’ and not only takes a toll on the businesses competing, but also on the managers and leaders dealing with the stress and worry of where to cut costs and service while dealing with the inevitable consequences of pushing down already tight margins.


I love this quote, it completely rings true the kind of reaction a smart business will take to something like a price war. Be the type of company that focuses not on what your competitor is doing, but be the company that focuses inward to achieve a service, experience and brand that is unforgettable and worth that extra mark-up.

Don’t throw caution to the wind and slash your own prices to compete with your competitors, and I’ll explain why. Then I’ll give you our best advice on what you need to do if this becomes a reality.

Why it isn’t good to start a price war

‘Mutually assured destruction’

Competing in a price war with a competitor will do exactly this for your business. Unless you’re running at a drastically high mark-up (Most companies are not) there will be a point where you’re going to start running at a loss and so will your competitor. Pride, ego, desperation and stubbornness is going to step onto centre stage and before you know it you’ll be cutting staff, service and everything in-between in order to keep up.

‘A cheap price, means a cheap service’
There comes a point when a customer looks at your price point and becomes distrustful of your seemingly too good to be true low-low price. They’ll go looking somewhere else, so don’t make your brand the too cheap to be good brand, because you’ll cement yourself a reputation you’ll struggle to shake.

‘Don’t be a sheep to the market’
Clients are more switched on than ever and they’ll notice you competing over market share through reduced price, you’ll merely signal to the market that you’re a follower and not a strong player.

Take Apple for example in the price-war between computer hardware suppliers. When Dell swept in with cheap units that left competitors desperately trying to get on their level, Apple were unwavering in their mid-to-high price point. Apple established themselves as a premium brand that has thousands of individuals that epitomise the term ‘Product Evangelist’ waiting days outside their stores just to get their newest product. You don’t see this with Dell, HP, Acer or Lenovo!

Establish yourself as a strong unwavering player in the market.

What steps to take if a Price War happens

So the worst has happened, a competitor has fired that first shot and you’re on the brink of a price war. I’ve got 9 effective tips on how you appropriately respond, without lowering your price!


Start with an investigation, why has this competitor suddenly lowered their prices? There can be a variety of reasons why something like this may have happened. Have they reduced their product and service? Or have they introduced a package offering? With some larger firms they’ll only raise their prices in your market for a limited time to push their smaller competitors out, this is worth knowing. Hunt for press releases and updates, or maybe even place a covert phone call and to a bit of investigating.


Conduct an inventory of absolutely everything, service offering, margins, predicted forecast – Can you survive this? Sometimes hunkering down and riding the wave may be prudent, as your competitor may not be able to keep up working at a loss.
Knowing the state of your business is hugely beneficial because it’ll give you a better platform to make considered decisions when it’s time to react to your competitor. This kind of thing may seem common-sense, but it takes effort and time to get a clear picture. Many people will assume the state of their companies affairs and bury their head in the sand, this is where problems will arise.

Damage control

If it’s obvious that some of your clients are aware of this competitor muscling in, then get on the phone and talk to them – (Make sure you’re all on the same page company-wide on what you’ll say/offer.) Secure their loyalty and offering worthwhile value-adds for their continued patronage.

This can be a tricky step remember, some clients If nurtured and treated well will obviously have a sense of loyalty and trust in your expertise. But – some clients may be ignorant to these competitors and simply alerting them to this could cause them to jump ship, especially if they’re only interested in saving money. Be careful, give them a reason to stay.

Maintain price – offer better service

Stick to your price point, maybe even raise it. But one thing is for sure look at how you can offer a better service or product. When a competitor run their prices to the ground they will not have the flexibility to increase the quality of their service. Let your customers see you’re putting worth in experience, quality, service, community, brand and flexibility, rather than price.
Look at what you as a company can do to differentiate yourself from the competitor. Hit home on an existing USP or come up with a completely new one, if you decide on just one of these tips make sure it’s this one. Leverage yourself as the market leader in innovation and quality.

Break the trend that price is the deciding factor. Reinforce the idea that a better experience, brand and service is worth paying extra, that the people whom place their trust in the company that offer a cheaper service do so with a risk and a gamble, that they will not see a return on their investment.

Drown them out

As we’ve previously mentioned, this kind of aggressive undercutting does not afford your competitor the luxury of other expenses, like marketing. Sure they’re cheaper, but are they able to get the word out? Tactically increase your marketing spend in things like SEO, Paid Ads, Print Ads and quality content. Double down on your noise making, pick out what makes your company worth the high price, and let your market know why you’re the leader in your industry.


You offer a great service worthy of the price you offer. So, rather than starting a price war, let prospective customers know this. Spend a bit of time getting glowing recommendations and testimonials from your existing clients, while making it visible across all stages of your buyer’s journey. 90% of customers say buying decisions are influenced by online reviews.

Work your existing clients

If you weren’t aware – smart businesses, see a greater return in upselling and nurturing existing client bases than trying to score droves of new clients. If the well is drying up in the market, focus your attention on making your clients feel appreciated and invested in your business. Create whitepapers and press-releases with transparency that inform your existing customers how their investment and continued loyalty improves your service and product for them. Remember it all leads back to them, don’t talk about how it helps you – talk about how it helps them.

Simplify the buying journey

Look at the whole spectrum of competitors and pricing from the view-point of your customer. Is it a confusing decision to choose who to invest with? Is there a wide variety of payment options and packages that are chock full of industry jargon? If so simplify it all, making a clear choice, that helps the client understand what they’ll get for their money will go a long way.

Make sure the buying journey for your customer is as seamless as possible. Many businesses have lost their customer to a convoluted experience through their website. Keep your customers, keep it simple.

Know your customer segment

You may be in luck and you need not worry at all about a price war. In some markets you customers may be more sensitive to a decrease in quality and experience than price. This snob factor is worth investigated, by conducting thorough buying profiles and interviews of your perspective clients. Don’t bring on a one-size-fits-all approach.

I hope that you’ll be able to utilise some of these tips if a price war does break out in your market. Try to remember that it’s never wise to sacrifice your product and service for price. Provide a product and experience so good they can’t ignore you.


About The Recruitment Network

This blog article was provided by The Recruitment Network.

The Recruitment Network is the ultimate support club for recruitment business leaders. We give our members an unparalleled level of support, guidance and tools to help them transform their recruitment businesses with the ultimate objective of improving business performance, increasing business efficiency and significantly growing profitability and shareholder value.

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