Pumper: How do you deal with a newcomer who undercuts the competition on price?

Sjofors: Price wars are always a mistake. When one guy comes in at 25 percent less, and everyone else does the same, then no one makes money. There are no winners in a price war. Just look at the airline industry.

What you need to do is maintain your price. That (price-cutting) competitor may take away some business for a time. But if he’s pricing his services below his costs, he’s going to go out of business eventually. Those guys become fly-by-night operators.

You also have to send a message to your existing customers: You’ve provided good service for many years, and it’s not possible for this newcomer

Coming Wednesday:

What else should pumpers consider when setting prices?