The public relations industry faces a significant challenge in maintaining pricing standards due to the prevalence of undercutting. This practice, where firms offer services at lower rates than their competitors, can lead to detrimental effects on both the firms themselves and the overall industry.
Undercutting often occurs because of low entry barriers for new PR firms and a lack of standardisation in pricing models. As a result, established companies may struggle to maintain their market position without compromising on quality or profitability.
Undercutting not only affects profitability but also impacts the quality of services provided. When prices are set unrealistically low, companies may compensate by hiring less experienced staff or reducing service quality to cut costs. This can ultimately harm client relationships and damage the reputation of PR firms as a whole.
Moreover, undercutting is not sustainable in the long term. It creates an environment where clients expect low prices without understanding the value that high-quality PR services can bring to their businesses. By focusing on strategic partnerships and demonstrating measurable outcomes, PR firms can justify higher pricing structures that reflect their expertise and contributions.
In addition to these challenges, predatory pricing strategies—where companies set prices below cost with the intention of eliminating competitors—pose legal risks if proven in court. While it is not illegal for businesses to temporarily offer lower prices for legitimate reasons such as promotions or market penetration strategies, doing so solely with intent to monopolise markets violates antitrust laws.
To resist undercutting effectively, PR firms should focus on creating value-added services that highlight their unique strengths and capabilities. By investing in talent development and showcasing tangible results through robust metrics, these firms can differentiate themselves from competitors offering cheaper alternatives but lacking depth or expertise.