Ask YC: Competitor flying under us...

Post by skmurphy » Thu, May 29, 2008, 3:19 AM UTC

SwellJoe wrote: post #29

josefresco wrote: post #18

Earlier quoted context omitted.

OR, the smaller competitor will deliver a much smaller and simpler product for less money and build a solid reputation as a high value low cost provider who's not over pricing their software just because they're working for the "government" which is known to have deep pockets and understand little about what they're buying.

"OR, the smaller competitor will deliver a much smaller and simpler product for less money and build a solid reputation as a high value low cost provider who's not over pricing their software" That's only possible if there has been a paradigm shift that the original poster has not identified. He's stated a few times that his company is operating on thin margins. I'm gonna give him the benefit of the doubt and assume…

Post by wehriam » Thu, May 29, 2008, 8:33 AM UTC

trevelyan wrote: post #12

wehriam wrote: post #6

Perhaps you could lower the initial price, raise the support contact cost, and add a sunset clause. This may appeal to those in charge of funding (who you mention are absent anyway) by shifting dollars around. More diligent clients would see this is not necessarily an attractive alternative and opt for your more traditional pricing model.

If the product and price are reasonable, he should stick to his original pricing. People who need the service will come around as long as it is not terribly expensive, and you avoid perception problems if you change your price wildly. The reason to be concerned about the competitor offering a cheaper product is if: (1) it will turn into a better product, or (2) it works differently enough to make your business model…

Post by SwellJoe » Thu, May 29, 2008, 4:47 PM UTC

skmurphy wrote: post #34

SwellJoe wrote: post #32

Earlier quoted context omitted.

"This is precisely the thinking that leads to getting disrupted by a different business model." Please re-read my whole comment (and the one above it). I've explicitly discussed paradigm shifts that change the shape of the industry. A "different business model" is obviously one such type of shift. But given the description of the situation, I don't believe the OP is in such a moment in the history of his industry.

I did, it's just that I agree with josefresco's comment, or at least see that scenario as more likely. We have different interpretations of the same information. My other point is the firms that get disrupted always see the alternative as less attractive.