For example, apps like uber or ordering apps, saturated market, but what if you could deliver the service at a 30-40% lower cost (all other things being equal). Is this model a good idea or is it a race to the bottom?
If your cost is very low, it can be a great idea. Look at Kogan.com that built a successful electronics retail company online, a highly competitive market, but the idea became extremely successful based on his core competitive advantage, i.e. low cost. Just depends on what sort of cost advantage you can provide!