Competing on Price

One of the rather more challenging aspects of the game trade which we are in is the fact that online, most people compete on price.  Due to the lack of barriers to entry, a lot of people recently have been getting not the business.  That unfortunately means we are now facing increased competition, most of which are competing on price.

What that means is that we have seen is a significant decrease in revenue as price sensistive customers move to our competitors.  However, changing our business model further – decreasing our sales even further – would be a bad move.  It’s a matter of margins.  A 15% decrease in our margins to compete would require a 30% increase in our revenue.  That’s a significant number, one that we find hard to meet.

So, what can we do about it? Well, if our current customers do not work then the better option would be find new customers, ones that are not as price sensitive.

Leave a Reply

Your email address will not be published. Required fields are marked *