Charging less sometimes can give you interesting advantages. For instance, Xiaomi effectively crushes their competitors by purposely cutting their profit margin[1], such that:
- If you are to build a product with similar quality to Xiaomi's, it has to be priced higher than Xiaom's, because unless your production/sales volume is on par with Xiaomi, your production cost is very likely higher than Xiaomi's. Customers will prefer Xiaomi's product because it is cheaper.
- If you cut down production cost by bringing down quality, you might be able to price the product in Xiaomi's price range. But customers will still prefer Xiaomi because it has better quality for the same price range.
- If you are to build a product with similar quality to Xiaomi's, it has to be priced higher than Xiaom's, because unless your production/sales volume is on par with Xiaomi, your production cost is very likely higher than Xiaomi's. Customers will prefer Xiaomi's product because it is cheaper.
- If you cut down production cost by bringing down quality, you might be able to price the product in Xiaomi's price range. But customers will still prefer Xiaomi because it has better quality for the same price range.
1: https://www.gizmochina.com/2019/11/28/xiaomi-ceo-says-that-g...