Our Daily Bleg: Need Some Startup Strategy, Please

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A reader named Patrick Nash needs your advice:

My friend and I have developed a cutting-edge technology for social media. There are other similar technologies out there for social media but we could never compete with their resources. Should we just point blank say we are the cheap alternative as a selling strategy? Sounds cheesy and flimsy but may be our only avenue.

What do you have to say to him? I don’t expect a lot of you to have experience specific to his product, but I know there are a lot of starter-uppers among our readership (yes, both kinds of starter-uppers), as well as what you might call “psychology of pricing” pros. So let’s see what kind of advice you have for Patrick.

Amy Weissfeld

Nobody likes cheap. But we do like affordable. So just find a better way to say it. We say, "Bringing Enterprise-class personalization to the SMB market."


Hmmm I know that sounds like a good idea. I have no experience, but from what I have read and seen it seems that pricing is not the only factor that makes someone choose a company over another.

As you mentioned "you could not compete with their resources" from which I can conclude that you are a smaller company, so the one big advantage your main competitor has is that they are bigger, most people associate bigger with being more reliable.

The best way perhaps is to compare your product with your competitor(s)'s product and equal out the similarities and then show at the end (without focusing too much on it) the price difference.

Also approach some forums that discuss similar products like yours and talk about your product and introduce your product and why is a better alternative.. perhaps it simply is because of the pricing, but I'd find one other small benefit .. perhaps (easier to use), more support.. etc..



Also reg the pricing itself - pls see if the decision maker will have any issue picking the cheapest. some ppl do not pick the cheapest.


Patrick - I have experienced the pain of a crowded market in the Internet space and I am a pricing expert.

My advice is that unless you have a dominant strategy and the associated tactics to spread the word on your solution, you are better served by a HUGE price on your service and add in a high level of customer support.

Remember the only winner in a price war - which is what you will initiate - is the customer. Your competitors will only react to your lowered pricing by lowering their pricing.

Jeff Cronin

Just like Andrea I assume that your inability to complete with competitor resources is really just a proxy for being smaller, not necessarily that you can't deliver a superior product itself. I have always been in this position professionally and worked to leverage the upstart position vs. a larger and more well known competitor. In general you will need to align your specific capabilities to the needs of a subset of your potential buying community and focus there. If your goal is to grow into the 'big' company then you need a strong (read; high-margin) position to leverage into adjacent segments.

If your goal is to be a successful business being run by you and your team then I would recommend you simply become a boutique provider to a specific segment.

Focus is the one thing you have that your competitor cannot match, that and the fact that they typically won't find a $40 million market attractive while you as a startup could play there for years.



You offer a better value proposition than your competitors.

Will Caskey

Give up. Four large competitors (Google, Facebook, Apple, Microsoft) have not already bought your service, which is the best statement of its value as can be requested. The market is healthy, and it has spoken.


Does cheaper mean less reliable?

You could always set the price in accordance With the demand you receive. Being the cheaper alternative wouldn't always sway the client into investing in your product or business.

Pick a unique selling point and promote it! Price isn't always the winning factor (but it can only help!)

Joe K Fobes

Look deep inside and ask yourself

"if I was the customer and I knew all the facts, would I buy from me?"

If the answer is no, then do something else.

If the answer is yes, then ask yourself "why?". And the answer to that is what you say and sell.

Congruency and sincerity sells.



Market to smaller companies or universities or anyone with eccentric but low volume requirements. Then emphasize customization and your ability to meet more esoteric needs. In other words: go after the customers the big players ignore because it’s not worth their time to try to please. Unfortunately, this means more work for you and your friend. Your customers will stick with you because you are “more responsive to their needs” which means they can push you around because you need their business whereas Google and Microsoft can ignore them.

Breandan Filbert

Patrick, Instead of making it about you and your strategy, describe the person who would best utlize your service. If it is affordable to smaller businesses and other start-ups describe the owner who would want to work with you.
So your statment might sound like 'The real approach to social media a small business can actually afford to implement'
It really is all about your customer and not about you after all. Make your marketing work as the marketplace works.
Good Luck and Good Selling!
Breandan Filbert


I would be very interested in learning more about the offering. There are many strategies you could adopt : depends on a whole range of factors :

a) B2B / B2C
b) Who the competition is?
c) Can you niche first and broaden?
d) What is the response to your product from the end users?


-Contact a recently graduated marketing guy with knowledge of internet development.
-read past articles of the very good magazine "inc".

-ask yourselves what is the main advantage of your product that even microsoft,google,or facebook cannot match.Besides the low price,of course!

there is a market for all products,of course,but the marketing guy or girl can help you to figure where is that market.(e.g.,..I have read recently that the chinese have bought a company in my country to make basic stoves that will sell for less than a hundred dollars in africa!)
good luck!

Rich F

My gut feeling would be to give it away !! let me explain, produce a 'lite' version that you can release as open source or free download with an option to upgrade to full version at a later date.

Alternatively, produce a free demo version that be given away with any relevant IT mags / publications.

It works for crack dealers !!


If you are a very low cost base organization, that may mean that you can enter markets that would not be as profitable for the higher cost companies. you maintain a "normal for sector" profit level in a sub sector that the others find unattractive due to there fundamental cost structure. then you move up the food chain

Tim Dellinger

Your only avenue isn't selling yourself as the cheap solution. Cheap = worthless (customer perception), and the last thing you want is a price war (you'll lose).

Your only avenue is creating a more compelling user experience, and building up a base of passionate users to help you iterate your product, and possibly pivot. Otherwise, you have nothing of value to sell. Build things that people want, and charge what they're worth!


You use whatever selling points you have. If that is your selling point, then you find a way to say it effectively. I mean, "Why Pay More?" is a good selling point for millions of folks--just look at generic medicine.



As an angel investor I see from two to ten social media startups each week. At times I suspect that everyone on the planet has a social media concept. Don't let that deter you. Consider that there were hundreds of auto manufacturers in the early years of the last century. Only a few survived and they were not necessarily the obvious winners in 1910. Consider the current prospects for AOL, MySpace and other reccnt hot properties.

Focus your effort on the user. What does your concept do for the user? If you're merely lowering the cost by a bit you'll have a hard time. Disruptive products are the best. How does your concept displace or improve on existing social media? Will your concept allow users to do something they've never been able to do before on line? Your area is not like a consumer or B2B product. There, the solution to a point of pain is the key. In social media you're selling something that's basically a luxury good - people don't need it but the more their friends use it the more attractive it becomes. How do you play to that?

Go to the Kauffman Foundation website and look up angel groups in your area and find out how to pitch to them. There are lots of people who are willing to bring resources to start-ups.

Best of success.



Just read this article by James Altucher: http://www.jamesaltucher.com/2011/04/the-easiest-way-to-succeed-as-an-entrepreneur/

Everything you need to know, right there.

Gabriel Moss

Gosh I sure appriciate the pull to be the low price provider. What I would do in your situation is look for the one stand out unique aspect of what u offer. Even if in the end u chose to be the lower-priced option describe explicitly what that means in concrete concise termanology. For example A company I created called text medicine is in the start-up faze. Our proposition is simple and explicit.

"What if you cut your twillio bill in half forever?

At twillio you pay 2 cents per text message sent and recieved. This can add up to tens of thousands of dollars per month with the successful implementation of your program. At Text Medicine we focus soully on the simple sending and recieving of text messages via your application. There for we can lower our cost to be able to charge 1 cent per message sent or recieved by your program. And our API is identical to twillio making halving your bill as easy as flipping a switch."

It sounds like what you are passioate about is creating cutting edge solutions for social media. I say follow your heart and make what is unique about you explicit and concise.

- Gabriel

PS Sent from my iPhone so pardon the adbrevs.

If you have created cutting edge technology