Captain’s log, stardate 20220827
Fellow list member Rajavanya Subramaniyan wrote in to ask the meaning of the phrase “winning the race to zero” (shared with permission):
I hear this term often, “winning the race to zero” when we talk about competing on price.
I googled for the term and didn’t understand it. Can you explain that please?
In some ways, isn’t economic development and capitalism all about making things cheaper and more affordable? Maybe I’m mixing up two different concepts.
“Racing to zero” is an absurdist reference to competitors undercutting each other’s prices until one of them “wins” (i.e., ends up charging $0 for their product or service).
Isn’t economic development and capitalism all about making things cheaper and more affordable?
I would say economic development is about increasing the wealth of society as a whole (perhaps unevenly, but increased nonetheless).
This wealth increase is generally accompanied by lower costs for commodities, goods, and basic services.
But nothing says you have to operate in those spaces... you can operate at higher levels by offering unique services, experiences, or transformations.
Race to the top, not the bottom.
P.S. Want to escape the race to zero? The Pricing Seminar returns for its tenth session in September.
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I hope to see you there!