According to Jack Welch, the former CEO of General Electric (GE) “if you don’t have a competitive advantage, don’t compete”. In a nutshell, he meant don't bother getting into the fray if you don't intend to win!
When two products or services have similar core features, but are produced by different companies, competition results.
Competition is the norm, not the exception in a free market - and that competition will affect how you price.
Just take a look at the UK grocery market and how it has become increasingly competitive in the past few years. The growing strength of discount giants like Aldi and Lidl have really shaken things up. Pound shops are also gaining market share and nibbling away at the precious margins of the big supermarkets.
Wouldn't you have an easy life if you could sell your products and services online for whatever you wanted – and your customers didn't complain at any stage – or go elsewhere? Obviously this might seem like a bit of a fantasy but it's entirely possible to achieve if you're using the right methods of pricing.
In a free market, competition is the norm, not the exception, and that competition will affect how you price. When competitors lower prices or new competition enters at a lower price, it is perhaps only natural to want to beat them at their own game - but the cost of price concessions may be higher than the cost of losing a customer or two.