Positioning based on low price or value.

Many business owners ask this question when they feel caught between two forces: customers complaining about high prices on one side and competitors undercutting on the other. But the right question is not "choose between low price or value?" but rather: "Do I really have a cost advantage, and what are my customers willing to pay more for?" These two questions lead to the right decision.

Structural cost advantage: the mandatory foundation of low-cost positioning.

Low-cost positioning is not about being brave or humble. It is a business model that requires a structural cost advantage, meaning your production or operational costs are systematically lower than your competitors, not coincidentally. That advantage comes from large scale, operational automation, exclusive supply, or a distribution model that is significantly more efficient than the market.

If you don’t have this advantage, selling cheaper means cutting into your own profits. And that race has no finish line, as there will always be someone willing to sell even cheaper. Many retail chains and fast-moving consumer goods operate successfully on a low-price strategy because they have real scale advantages. But this is not the right direction for every business.

When to choose which direction

There is also a third direction worth considering: value innovation, a concept from Kim and Mauborgne. Instead of choosing between cheap and premium, you eliminate what the industry is competing over but customers don’t actually need, reducing costs while enhancing the value that customers truly want. This is not a solution for every situation, but a mindset shift that helps escape the squeeze.

Price is a signal, not just a number.

Customers do not just compare prices. They read prices as signals of quality, status, and reliability. In many contexts, especially when customers do not have enough information to assess quality directly, a low price may be interpreted as low quality. This is not true in every industry, but it holds in many service sectors, emotional products, and B2B products.

This means that pricing is not simply a financial calculation. It is part of the positioning system. The price needs to align with the experience you commit to, with the brand image, and with the expectations you create in the minds of customers. High pricing without a corresponding experience will undermine the positioning faster than any competitor.

High value that customers cannot perceive or verify is equivalent to having no value.

The principle of value systems, practiced by Sinh Vũ

Common errors when choosing positioning

• Choose a low price out of fear that clients will think it's expensive, while lacking cost advantages, leading to gradual losses without immediate realization.
• High pricing without building value evidence leads customers to feel shortchanged and leave, resulting in a bad reputation.
• Confusing short-term promotional discounts with long-term price positioning: continuous discounts train customers to only buy when there is a promotion, weakening the original positioning.
• Do not establish value evidence, forcing a return to price competition, creating a loop with no exit.

Sinh Vũ's viewpoint

Sinh Vũ leans towards value-based positioning for most businesses that do not have inherent cost advantages. This is a consulting trend, not a truth for every business model. Sinh Vũ states this clearly so that you can judge according to your own practical model.

In practice, Sinh Vũ uses the Value Proposition Canvas by Osterwalder to clearly map whether the value you provide aligns with the pain points and expectations of clients. Then, it is expressed in language that clients understand, not internal jargon. This lays the foundation for positioning based on value rather than competing on price. As for specific pricing numbers, profit margins, and financial models, those need to be discussed with your finance team, not something Sinh Vũ decides on.