The Internet home based small business market is very competitive. When you go online to market your product, there are many businesses that will try to undercut your prices. Ultimately you will need to determine whether you should compete based on price alone.

Here are 5 strategies that you can use as an alternative to competing on price alone:

1. Is your primary goal to make profit, make the sale or keep the customer? Many Internet businesses have an inexpensive front end product. The idea here is that you want to get clients introduced to your website so that they will later on purchase some of the higher priced products.

If you sell a report for seven dollars and your competition sells it for five dollars you might want to meet their price. Sometimes a 2 dollar drop in price is not worth it if you are going to lose the client. These customers could lead to a higher profit on future sales.

2. What is your production overhead? If you are selling information with your home based small business, you do not have a lot of costs involved in product creation. Your prices will need to be based, to a certain extent, on your cost of production.

Could you cut your prices to bring in more customers? People are always looking for a deal. When you go to choose your price point, you need to take a hard look at your production expense.

3. What are the ongoing costs associated with your product? You have to promote your product. If you master promoting with free and nearly free advertising, you may be able to reflect that in your product price.

Do not forget to factor in your time. Time really is money and you should get paid for the work you do. Calculate your hourly rate to determine how much money you need to make to create a profit.

4. Can you add more value to your product instead of dropping the price? Can you offer bonuses or contests? A lot of website owners will offer bonuses which builds trust with their clients.

Another strategy is to enhance the product itself in some way. This increases the value of your product to the consumer.

Make your bonus unique. There are a lot of online business people offering them so you need to be creative in order to drive traffic to your site

Whether you should compete strictly on price with your Internet home based small business comes down to your niche and products. Keep in mind, before you start to cut prices, you still need to be profitable with your business.