👉 The "pricing weapon" refers to a strategic tactic employed by companies, particularly in the tech industry, where they deliberately set prices too low to force competitors into price wars or unsustainable losses, with the intention of later raising prices once the market dynamics have shifted in their favor. This tactic leverages the psychological impact of low prices on consumers and competitors, aiming to gain a temporary market advantage. By undercutting competitors, companies can drive them out of the market or compel them to lower their prices further, eventually allowing the original firm to increase prices and recoup losses or gain higher profit margins. Once competitors are weakened, the pricing weapon can be reversed, making it a powerful but risky strategy that requires careful execution and market understanding.
