Comment by TZubiri

4 hours ago

If the business proposition is being "cheap", then they will have to undercut everyone

If you undercut everyone, they will undercut competitors with the same strategy

If a cheap competitor undercuts a cheap competitor margins will tend to zero

If a competitor is pricing at zero and you need to undercut them, you will operate at a loss

Eventually the company will either shut down, or be liquidated, its valuable assets (the existing contracts and list of customers) will be bought by competitor or Private Equity.

This is common in domains, thousands of registrars get acquired by a megacorp, see NewFold Digital.

So in essence, when the business proposition is being cheap, the natural consequence is the business dying and being sold for parts to a purchaser that will have to degrade the cost to value relationship that got the customers in the first place.

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TZubiri

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AnthonyMouse  36 minutes ago

> If the business proposition is being "cheap", then they will have to undercut everyone

Consider a market with three suppliers.

Supplier A charges $12.00 and is widely regarded to be The Worst. Their only support is a broken chatbot with a tendency to lock your account at random and their UI is full of dark patterns that trigger hidden fees.

Supplier B charges $12.50 and is widely regarded to be a reasonable operator that will rarely screw you and offers basic no-frills service.

Supplier C charges $20.00 and is widely regarded to be a reasonable operator that will rarely screw you and offers a bunch of convenience features and integration with WordPress or something.

Which one are you going to choose? Maybe C if you want the convenience features, maybe B if you want the lower price, but never A, right?

Now suppose you're B and you want to pick a name that emphasizes that you have a lower price than C.