Your Unique Selling Point Can't Be Pricing – Yet Microsoft Is Doing This Perfectly.
Your Unique Selling Point Can't Be Pricing – Yet Microsoft Is Doing This Perfectly.
Their products are everywhere. People hate them but still use them.
🕒 TLDR;
🏷️ They tell you when you create a startup that it’s unwise to have low pricing as your competitive edge — it’s just not enough.
There are two viewpoints: Entrepreneurial and Business.
🧠 Entrepreneurs will tell you to innovate.
💰 Financial mindsets will tell you to retain.
📈 Microsoft has been doing this for years and is now almost valued at $3 trillion.
You’re better because you’re cheaper? Are you kidding?
I’ve heard this from investors more times than I can remember. I understand their point. Simply put:
Your pricing is cheaper.
Your competitor decreases their pricing.
You’re toast.
But there are cases where this actually worked out quite well. For instance, Careem, an Uber competitor, returned 100X the investment. They were cheaper, full stop.
They had $770m of investments. In other words, they were playing a game of “Uber buy me now.”
So, let’s agree that pricing alone is not enough to sustain you in most cases.
Microsoft — below average products with ~$3 trillion of market cap.
I could explain to you why I said “below-average products,” but let’s start with this TikTok.
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As one of the commentators on my Medium stories said, “As someone said — Slack has 20m users, and Teams has 300m hostages."
The Microsoft Paradox: Unloved, Yet Unavoidable
Here's a riddle: What’s a thing you use, can’t rely on, hate, but can’t live without? Microsoft products (surprising, I know.)
Honestly, I personally like PowerPoint, Word, Excel, and maybe Azure. So I’ll exclude those.
OneDrive? Not the best, nor the cheapest, nor a design marvel. Yet, it's everywhere.
Yet, this isn't just about OneDrive; it's a Microsoft thing. They bundle their products in a way that makes them irresistible.
Not only that, they create products of quality that are just on the verge of being unpractical. This makes you think, “Oh, but I can’t stop using it because I need the other apps.”
Bugs, bugs, and more bugs manifest in Microsoft products. Users know and anticipate the bugs.
My girlfriend asks me once a week to help with her OneDrive issues (because I’m the “IT guy” of the family). But I’m not worried; whatever bug that appears, users have already posted about it on Reddit and discovered smart solutions.
Pricing as a unique selling point — How Microsoft aced it.
There might come a time when your company is valued at $3 trillion. At that moment, replicating a product like Google Maps could be done in a week with a phone call. Your resources put you on a different level of thinking.
So, does it hurt to offer every app in your super bundle? Heck no.
Is it the right thing to do? There’s no such thing as “right” in the business world. You’re not hurting anyone (meh).
But here’s the thing — Microsoft can afford it.
You create an amazing product.
Microsoft creates a replica that is 80% as good.
You decrease your pricing to have an edge.
They decrease their pricing.
You decrease your pricing further.
They offer it for free.
You offer it for free.
You’re bankrupt in one week.
They increase their pricing then and start making money.
You can’t out-bid a large competitor with pricing. Microsoft knows that and gladly takes on the likes of Slack, Notion, and even Google. But the latter has quite a big cash flow.
So they won’t go toe-to-toe in pricing and waste their resources. They’ll go after the young players instead.
Your options are: innovate, innovate, innovate, fundraise, innovate, innovate, and fundraise. Entrepreneurship is not only about innovation. It has become a game of speed.