A Competitor Is Cheaper: Should You Drop Your Price?

No. When a prospect says a competitor is cheaper, ask one question: “If we were the same price, who would you pick?” If they pick you, ask why, then ask whether those reasons are worth the difference. You’re no longer selling your full price, only the gap. And if they still say no, cut the scope, never the rate.

Why shouldn’t you discount when a competitor is cheaper?

Because a discount comes straight out of what you keep. Your costs don’t go down when your price does. McKinsey studied the average income statement of an S&P 1500 company and found that a 1% price rise, with stable volume, would lift operating profit by 8%. The same math runs backward: a 1% cut takes that 8% away if nothing else changes.

A quick discount also tells the client your first quote wasn’t real. The next time they hire you, they’ll push again.

Here’s what you can do: before your next sales call, write down the lowest rate you accept, and don’t go under it.

What should you ask instead of lowering your price?

“If we were the same price, who would you pick?” This moves the talk from cost to value. A prospect who is still talking to you, after seeing a lower quote, usually wants to work with you. They are looking for a reason that makes the extra money feel right.

If they would still pick the other option at an equal price, then price was never the real problem. You just learned what is, and you can answer that instead.

Here’s what you can do: say the question word for word, then stop talking and wait.

Why let the client explain why they’d choose you?

When they say yes, ask “Why?” and let them list it. Faster delivery. Better reviews. They trust you. You understood their project on the first call.

Those reasons land harder in their words than in yours. Coming from you, the same list sounds like a pitch. Coming from them, it sounds like a decision they already made.

Here’s what you can do: take notes, and reuse their exact words in your proposal.

How do you sell only the gap?

Picture a wedding photographer quoting $1,500 against a competitor at $1,300. The couple has already agreed to spend $1,300 on photos. So you aren’t defending $1,500 anymore. You’re selling $200.

Then ask: “Are the faster delivery and the reviews you mentioned worth $200 to you?” Two hundred dollars, tied to reasons the couple named, is a far easier yes than the full amount.

Here’s what you can do: name the difference in dollars, and leave the total out of that sentence.

What if they still say no?

Cut the scope, never the rate. Offer a smaller package that fits their budget. For the photographer, that could mean fewer hours of coverage, fewer edited photos or no printed album.

The client gets their price. You keep your hourly value. The full package stays available if they want to upgrade later. If you drop the rate instead, every future quote starts from the discount.

Here’s what you can do: prepare a lighter version of your main offer before the next call, so you never improvise one under pressure.

What do we do at 33 Genesis Road?

Here’s what we do: we look at how a business sets its prices, what each service really costs to deliver and where discounts quietly eat the margin. Then we build packages with clear scopes, so an owner can meet a smaller budget without touching the rate.

Losing margin every time someone pushes back on price? Get a free audit, in less than 24 hours. We look at your whole business and show you where it loses time, money or clients.

FAQ

What do I say when a client says a competitor is cheaper?

Ask “If we were the same price, who would you pick?” Then ask why, and whether those reasons are worth the difference.

Should I match a competitor’s price?

Rarely. McKinsey found that for an average S&P 1500 company, a 1% price cut lowers operating profit by about 8% when other factors stay the same. Protect your rate and adjust the scope.

What does “sell the gap” mean?

You only sell the difference between your quote and the lower one, $200 instead of $1,500, because the client already accepts paying the lower amount.

What if the client still picks the cheaper option?

Offer a smaller scope at their budget. If they still leave, let them go. A client who buys on price alone will leave for the next lower quote too.

Sources: McKinsey Quarterly, The power of pricing, by Michael V. Marn, Eric V. Roegner and Craig C. Zawada (February 1, 2003). Idea: @forward.usa on TikTok (October 3, 2026).