The catch with low prices in times of crisis like the current one brought the term low cost into fashion. But the concept is distorted. Being cheaper or running promotions doesn’t make a company really cheap. In order for things to work and be worthwhile from a business perspective, the benefits are inviolable. “It’s not about setting low prices to eliminate inventory or reduce profit margins. Low cost is just as profitable as high cost,” says Eric Legras, partner at advertising agency TvLowCost.

How can you be more profitable even than the competition by lowering the prices? “You have to make one Reinvention of the business model. A process of total innovation to adjust costs and offer better prices without compromising quality,” explains Josep-Francesc Valls, Professor of Marketing at Esade and author of the book Low Cost Phenomenon.

Note well: the model now being introduced has little to do with the low prices that have made Chinese shops and restaurants popular. It’s about offering Quality at a good price.

Lorenzo Pérez, General Manager of the Pepe businesses of the Globalia Group, summarizes this magic formula in two elements: “From the company’s point of view, the strategy consists of minimize costs in order not to have to pass the deductible on to the customer in the final price. From the point of view of the product, it is about break down its various costs as much as possible so that it is the customer who chooses what they want to buy, as opposed to the traditional model where the supplier decides what costs make up the product they want to sell”. A simple model, but very difficult to put into practice. Let’s be realistic.


It goes without saying that here we are not inviting you to start a low-cost airline, a supermarket or an online bank, the pioneer companies in this model. There may be many more opportunities in markets where the idea has been less used, such as B. Hairdressers, opticians, restaurants, business centers, gyms, bus routes … The formula can be applied to anything, as you can see in this dossier. And when you find a completely virgin market, you don’t even have to advertise. Innovative ideas in this area sell themselves. We insist that the difficult part is to be really efficient.

Create a new market

To start successful businesses, Eric Legrás recommends “thinking about practical businesses. Any product that’s on the market where you can cut all the frills and reach more people or increase consumption.” For Lorenzo Pérez, the best opportunities could be in the sectors “that involve recurring consumption, and especially all of them that have to do with leisure”. The important thing to consider and a reason to be encouraged with these companies is that you can try to create a new market instead of competing directly with big companies: reach new consumers.

The low-cost formula is simple: match costs to lower prices. But the implementation is a bit more complicated. The strategy absolutely requires an adjustment of the business areas so that everything fits. We explain everything you need point by point.

Can an SME drive prices down and volume to achieve a 30% return? The easyCut hairdresser proves it. And the best thing is that its low-cost actions can be adapted to any SME.

Supermarkets came first, followed by airlines, banks and travel agencies… The phenomenon is now unstoppable. There is already low-cost experience in almost all sectors. But some are almost virgin.

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