---
title: "How Should Brands Cut Prices?"
description: "Several founders recently asked whether to cut prices. While price cuts seem like a simple way to boost sales, they often harm the brand and fail to generate profit. The real issue is not price but value: brands must demonstrate their value through content and positioning, not engage in price wars."
author: "Keny伟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-12-17"
language: "en"
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# How Should Brands Cut Prices?

> Several founders recently asked whether to cut prices. While price cuts seem like a simple way to boost sales, they often harm the brand and fail to generate profit. The real issue is not price but value: brands must demonstrate their value through content and positioning, not engage in price wars.

Source: Marketing Old Wang
Recently, several founders I work with have come to me with the same core question: should we cut prices?
Compared to driving growth through content, cutting prices is a standardized, simple tactic. Many believe that as long as a brand dares to cut prices, sales will spike. But in reality, price is a crucial part of a brand. Brands that only know how to cut prices may seem to solve the short-term problem of unsold products, but in the end, they not only fail to make money but also damage the brand.
This issue continues sharing my daily communications with founders—about price cuts.
**Background of Each Brand**
**Brand A:**
1) In the pet industry, a red ocean, with limited marketing budget, hoping to quickly recoup funds, very tempted to cut prices.
2) Strong private domain traffic with high repurchase rates, but the platform has many promotions. Should they follow the platform's price cuts? How to balance minimizing harm to private domain users?
**Brand B:**
A new brand that caught the eye of a top influencer in the industry. The influencer wants to collaborate, but at 50% off the Tmall store price. The founder is very tempted because being noticed by a top influencer could quickly boost sales and industry visibility, but is torn about whether to offer 50% off to satisfy the influencer.
**Brand C:**
In the red ocean maternal and infant market, TOP1 in a subcategory, mainly selling products from Origin B. A competitor launched a product from Origin A at a lower price.
The owner faces a choice: should the store stick with Origin B products or also sell Origin A products? Selling both would capture price-sensitive users and prevent them from going to competitors, and Origin A could serve as a traffic driver, converting users to higher-priced Origin B products.
The concentration of these issues makes one sigh at the intensifying brand involution. Founders are all thinking about adjusting prices.
**But in reality: Price is important, but not fundamental.**
Cutting prices is easy; raising them is hard.
For some brands, price cuts are promotions; for others, they are burning bridges.
Why is it that during Double 11, the top lists are mostly foreign big brands? Domestic brands spend heavily and are cheaper, yet they are absent from the promotions.
Because for big brands, consumers see price cuts as promotions—they can buy big brands at prices not available normally. With limited money, they choose big brands first, thinking domestic brands often have promotions, so there will be other chances.
Big brands are expensive, but people feel they are worth it! This is a value issue, not a price issue.
When you fail to demonstrate value, you resort to sacrificing margins in price wars. Years ago, Tmall and Taobao used this tactic: with high traffic, small profits and high volume could still make money.
Now traffic is hard to come by, and using the same tactic either yields meager profits or none. In the content era, you must demonstrate value. In fact, for most consumers today, tens or a couple hundred yuan doesn't require much deliberation.
So once you get drawn into an industry price war, it's hard to stop, and your tactics will definitely distort. You'll become a pure sales brand.
**For these three brands, the core issue is not price; it's that the brand doesn't know how to demonstrate value.**
**So the core thinking should be: How to demonstrate the product's value?**
**Addressing the first question**
How to minimize harm to private domain when cutting prices?
It's very difficult. Private domain users have high repurchase rates, indicating strong brand loyalty and product approval.
But if even one private domain user discovers lower prices on the Tmall store, it will quickly spread. Then, not only will repurchase rates drop, but users' goodwill toward the brand will also suffer: "This brand is always cutting prices; maybe there's a problem with the product?" Negative comments may also arise: "I just bought two days ago, and now it's cheaper; I should have waited."
So, for brands with strong private domains, when participating in platform promotions, occasional small discounts (matching private domain prices) are fine, but for major promotions that break private domain prices, announce them in advance in the private domain.
Additionally, the founder wants quick cash flow to avoid inventory pressure. Two points to note:
1. Focus on production: don't overproduce, or you'll end up with unsold stock in warehouses.
2. If prices are above industry average, you must create content to demonstrate value. This includes brand education in the private domain and user referrals.
Creating content includes collaborating with influencers and brand's own self-media content.
Many brands are lost when it comes to self-media content. They want to imitate others' polished content but lack the team capability. They try to build content matrices but end up with only accounts and no content.
This founder has indeed put effort into product refinement, and user feedback is very positive. These are all content opportunities. Content isn't just about saying how great your product is with fancy words. Often, authentic, credible, and detailed content is more compelling.
**Addressing the second question**
The founder is very tempted to cut prices, after all, a top influencer recognizing a new brand is like being chosen by the emperor. Top influencers not only drive sales but also provide endorsement.
But the key issue is the 50% discount.
This brand is the second in the founder's brand portfolio; the first is mid-to-low-end, and this one aims for mid-to-high-end.
The brand has just launched, and being recognized by a top influencer for its product strength, and proactively approached, is indeed a great thing.
If Estée Lauder offered 50% off, people would see it as a promotion, and it wouldn't affect brand image.
But for a new brand without established brand image, a 50% discount puts it at the low end of the industry. The impression on consumers would easily be: "There's a new brand with good products but very low prices." With the influencer's reach, this perception could spread quickly and widely, turning the brand into the Xiaomi of its industry.
Even though Xiaomi has launched high-end phones, people still see it as "extreme cost-performance," not a mid-to-high-end brand.
Once consumers form an impression of a brand, it's very hard to correct later, even at great cost. Winning hearts is the hardest.
If your brand has no recognition, you might have a chance.
So, the influencer's desire for 50% off likely stems from a one-off deal mentality, not caring about the brand's long-term development. This isn't a healthy partnership for mutual growth.
When other brands start competing on price, their founders focus on selling, not the brand. Don't voluntarily join the involution; it will only harm you. The so-called **brand positioning is about finding your value and communicating it to consumers.**
In the end, we used other, better ways to communicate with the brand, avoiding the damage of price cuts to a new brand.
Additionally, when communicating product selling points, focus on the target audience and address their concerns, rather than getting lost in the product itself and listing features.
**Addressing the third question**
This maternal and infant food brand focuses on Origin B products, priced slightly higher, and their product pages compare with Origin A to highlight their superiority and justify the price.
So, I vetoed the idea of adding Origin A products to the store. It would backfire, for several reasons:
**1. It would trigger a flood of customer service issues. Consumers aren't experts; they see similar products but different prices, and they'll ask customer service, even in the private domain.**
**2. The Origin B product page already compares with Origin A, mentioning its drawbacks. If the store also sells Origin A, consumers will see the brand as contradictory—criticizing a product while selling it.**
So, the root of this problem isn't whether to add Origin A products to capture that traffic. Instead, it's about how to thoroughly analyze and communicate the value, differentiation, and factual advantages of Origin B products to consumers, building genuine trust. That's what the brand should focus on.
**Summary**
When competitors cut prices and low-price brands emerge, don't rush to follow suit. It's 2021, not 2011, when e-commerce relied on price wars to survive.
Price is a short-term stimulant that brings brief excitement but causes long-term brand damage. Consumers come for low prices and leave for even lower ones; loyalty and repurchase rates are poor.
You can never be the lowest price in the market; cutting prices is the least skillful tactic. The core should be:
**1. How to highlight product value and match it with the target audience's needs.**
**2. How to use content to explain product value and make consumers perceive it through appropriate channels and formats.**
**3. How to focus on product selling points, penetrate a specific audience, and find a niche in the red ocean.**
However, don't set high prices just for the sake of it; if price deviates from value, it becomes exploitation.
Remember, don't cut prices casually.
**Are you "watching" me?**


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