How-to guides · 26 August 2026

Are your prices above market? A test you can run this afternoon

Your prices are above market when a meaningful share of the products people actually buy from you cost more at the stores those same people shop — and the gap is large enough to change their decision. That is a measurable thing, not a feeling. The test takes an afternoon: pick the products that carry your revenue, find the real delivered price at three or four competitors, and calculate what closing each gap would cost you. Most stores discover the problem is narrower than they feared and concentrated in a handful of SKUs.

Why the feeling is usually wrong in both directions

Two failure modes, and they are equally common.

The first is panic from a sample of one. A customer emails to say they found it cheaper elsewhere, and you cut prices across a category. One data point, one competitor, possibly one clearance item, and you have just repriced 60 products.

The second is quiet drift upward. You raise prices with a cost increase, competitors do not, and nothing tells you — because nothing announces it. Nobody emails to say "you are 12% above the market on your best seller"; they just buy elsewhere. This is the more expensive failure, and it is invisible without measurement.

Both are solved the same way: stop asking whether your prices are high and start asking, product by product, how high and at what cost to fix.

The procedure

1. Pick the products that matter. Take your top sellers by revenue over the last 90 days. In a 400-SKU store that is typically 40–80 products. Add any thin-margin product regardless of volume — that is where a gap hurts fastest. Ignore the tail; a price gap on a product that sells twice a year is not a business problem.

2. Pick three to five real competitors. The stores your customers actually mention, plus one habitual discounter as a floor reference. Not "everyone in the category".

3. Record the delivered price, not the listed price. Add shipping for a realistic basket. In categories with bulky goods, shipping regularly swamps the product price difference. And check whether the store displays prices including or excluding tax — some platforms make that a per-store setting, and a competitor who appears 20% cheaper may simply be showing pre-tax numbers.

4. Compare like for like. Same variant, same size, same pack quantity. A 500ml against a 1L is not a price gap, it is a measurement error.

5. Compute the gap as a percentage, then sort descending. You now have a ranked list rather than an anxiety.

The arithmetic that turns a gap into a decision

A percentage gap is not yet a decision. This is:

Take a product you sell at $40 that costs you $24. Gross margin is $16 a unit — 40%.

You find you are 10% above market: competitors sit at $36.

If you match at $36, your margin becomes $12. To make the same gross profit you need 16 ÷ 12 = 1.33 times the volume — a 33% increase in units. Ask yourself honestly whether a 10% price cut plausibly wins you a third more sales on this product. On a differentiated product it usually does not. On a commodity where you are the only expensive option, it might.

If you hold at $40, you need to lose less than a quarter of the volume for that to be the better outcome: at $36 you make $12 a unit, so 100 units at $40 ($1,600 gross profit) beats 133 units at $36. In other words, holding is right unless you genuinely expect to lose about a third of the demand.

Now run the same maths upward, because this is the calculation almost nobody does. If you sell at $40 and the market has drifted to $44, moving up gives you $20 a unit. You can lose 16 ÷ 20 = 20% of your units and be exactly as well off. On a product where price is not the only reason people buy, losing a fifth of volume from a 10% rise is a pessimistic assumption — which means "am I underpricing" is frequently the more profitable question than "am I too expensive".

The general form is simple enough to keep in your head:

• To survive a price cut of c% on margin m%, volume must rise by c ÷ (m − c).
• To survive a price rise of r% on margin m%, volume must not fall by more than r ÷ (m + r).

Thin margins make both directions brutal. At a 25% margin, a 10% cut needs a 67% volume increase to break even. That single number ends most matching arguments.

When being above market is correct

Being more expensive is a position, not a mistake, when at least one of these is true and your product pages actually say so:

• You are the only one holding stock. Availability is worth real money, and a competitor's out-of-stock listing is not a competing price.
• You deliver faster, and the buyer cares about the date.
• You give advice that prevents a wrong purchase — fitment, sizing, compatibility. Returns are expensive for the customer too.
• Your returns or warranty terms are genuinely better.
• The cheap competitor is a grey importer with no local warranty.

The failure is not being expensive. It is being expensive silently, so a shopper comparing two tabs sees only two numbers.

What to watch out for

A clearance price is not a market price. A competitor liquidating stock is not repricing the category. Give it two weeks before you react.

A price you cannot see the history of is a snapshot, not a trend. Whether a competitor's $36 is a two-week promotion or their new normal is the single most decision-relevant fact, and one look at their site cannot tell you.

Do not reprice the whole category from one product. Gaps in a healthy catalogue are usually specific: a supplier deal someone else got, a product they use as a loss leader.

Do not chase a discounter to the floor. If someone is consistently below everyone, they either buy better than you or make their money elsewhere. Match them and you will find out which, expensively.

When you do not need software for this

For a first pass, you do not. With 20–30 products and three competitors, this is a spreadsheet and an afternoon, and doing it by hand once is genuinely worth more than any tool, because you will see the pattern yourself. Do that first.

The manual version fails on repetition. It is a snapshot, and prices move after you close the file. It becomes untenable when you have more than about 50 products worth watching, more than about five competitors, or when you need to know within a day rather than within a quarter.

Where Pricemastr fits

Pricemastr turns that afternoon into something that keeps happening. Setup is one store URL — no mapping products by hand. Your products come back paired with the same items at the competitors you choose, each pairing carrying a reliability indicator so you know which comparisons to trust, and anything uncertain goes to a review queue for you to confirm or dismiss rather than being linked silently.

Paid plans re-check daily and send a single morning email when something moves: new undercuts, sharp drops, and competitors going out of stock while you are in stock. Price history is retained, so you can distinguish a promotion from a repositioning. Suggested prices come from a rule you set — direction, percentage, reference — and you decide; Pricemastr never changes prices in your store.

Basic is $0 with one competitor store and a weekly digest. Pro is $39/month ($390/year) for 3 competitor stores and 1,000 of your products; Max is $99/month ($990/year) for 10 competitor stores and 10,000 products. Details on the pricing page, and if you are comparing tools, the category cost breakdown covers what this kind of software typically runs.

If you would rather not redo that afternoon every month, start free — Basic is $0, no card.