Michelle Obama On Startup Pricing
On startup pricing, Michelle Obama famously said,
…our motto is: when they go low, we go high1
A post on Indie Hackers reminded me of this quote:
So, I’m thinking if I should try offering an email service, similar to Google Apps, but more affordable..
Just raise prices has been the rallying cry in the bootstrap community for the last couple of years2, but this is a different topic.
When competing with large entrenched competitors competing on price is almost always the wrong strategy. Founders, especially those who were developers, grossly underestimate what it takes to build and support something.
Google could easily run Google Apps for nothing (they did for a long time). The price is already low, and they likely could go lower. They have resources and margins you will never attain.
Instead, how you compete with an entrenched competitor is with things they cannot possibly compete with like support and personal interactions. In the case of Google Apps, a couple of dollars a month (even 100s) is not going to make a big difference. But personally setting up the DNS? Helping the customer figure out DKIM records, SPF records, correctly using their business domain for email with their other third-party integrations will make a significant difference and one that they will likely be able to pay for with much better margins.
Find your competitive advantage and use it.