How-to guides · 2 September 2026

A competitor undercut you. Here is how to decide what to do.

Before matching a competitor's price cut, work out the extra volume the lower price needs just to break even. At a 40% gross margin, matching a 10% cut needs roughly 33% more units to leave you no worse off. Most price cuts do not deliver anything like that, which is why the correct response is usually to hold, watch, and do nothing.

First, confirm what actually happened

Half the price cuts people react to are not what they appear to be. Five minutes of checking before any decision:

Is it the same product? Pack size, bundle contents, edition, colourway, included accessories, warranty length. A competitor "undercutting you by 12%" on a 900ml bottle when you sell 1 litre is not undercutting you at all.

Is it the same total? Compare what a buyer pays, not what the product page says. A rival at $49.99 with a $6.95 shipping charge is more expensive than you at $52.00 with free delivery, for a single-item order.

Is it permanent? Look for an end date, a sale badge, a seasonal pattern. A two-week promotion is not a repositioning, and reacting to one with a permanent cut is how a temporary problem becomes a permanent one.

Is it in stock? A very low price on an out-of-stock item is a listing, not a competitor.

The break-even calculation

If a price cut does not bring in enough extra units, it costs you money — no matter how many more orders you see. The threshold is exact:

Required unit increase = old margin per unit ÷ new margin per unit, minus one.

Worked through: you sell at $60.00, your cost is $36.00, so your margin is $24.00 (40%). You move 200 units a month, producing $4,800 of gross margin.

A competitor cuts to $54.00 and you match. Your margin per unit falls to $18.00. To keep $4,800 you now need 267 units — 33% more than you sell today.

Here is the same question across common margins:

Two things fall out of that table. The thinner your margin, the more brutal a cut is — at 25% margin, matching a 10% cut needs two-thirds more volume, which essentially never happens. And small cuts are far cheaper than they feel: at 40% margin, a 5% match needs only 14% more units, which is sometimes achievable.

So the question is never "can I afford to match?" It is "do I believe this price difference moves my volume by that specific number?" Say it out loud with the number in it. It usually answers itself.

The four responses, and when each is right

Hold. The default, and right more often than people expect. Price cuts are the easiest move a rival can make and the easiest to reverse. Matching teaches them you will always follow, which makes the next cut cheaper for them. And most of your customers never see both pages.

Partial match. Close some of the gap on the specific products that are genuinely comparison-shopped. Preserves margin on the rest of the catalogue, which is where most of it lives.

Match on a subset. Pick the five or ten SKUs a customer actually compares — the ones with a well-known price — and match only those. Your anchors stay competitive and the long tail stays profitable.

Change the offer instead of the price. A free-shipping threshold, a bundle, a longer warranty, faster dispatch. These move the buyer-facing total without publishing a lower number that you then have to climb back from. Coming back up from a price cut is far harder than never having gone down.

When matching genuinely is right

Four conditions, and you want most of them:

• the product is a true commodity, identical from either seller
• your category is price-led and buyers compare in one click
• you have the margin to absorb it without going below your floor
• the rival is a store your customers actually visit

If you are missing two or more of those, hold.

Set a review date

Whatever you decide, put a date on it — two weeks out, in the calendar. Then check whether the rival's price is still there. A large share of cuts revert, and the stores that quietly reverted while you stayed low are the reason this step exists.

Track the price over that fortnight rather than checking once. A price that has bounced twice is a promotion; one that has sat still for a month is a new position, and it deserves a different answer.

When you don't need software for this

If you have ten products and one competitor, you do not need a tool to notice a price cut. You will notice. Open the tabs on a Monday, write the numbers in a spreadsheet, and spend the saved money on stock.

Monitoring earns its place when you cannot notice: a few hundred SKUs, three or more competitors, or a category where prices move weekly. That is the point where an undercut sits there for eleven days before anyone spots it — and eleven days at 8% under market on your best sellers costs considerably more than any plan in this category. The small-store guide covers where that line sits, and the cost breakdown covers what crossing it costs.

Where Pricemastr fits

The expensive part of being undercut is rarely the decision — it is the delay before you know. Pricemastr closes that gap: one store URL to set up, no mapping products by hand, and your products come back paired with your competitors' automatically, each pairing carrying a reliability indicator you can review. Pairings it is not sure about go to a review queue for you to confirm or dismiss rather than being linked silently.

On paid plans prices are re-checked daily, and a morning alert covers undercuts, sharp price drops and competitor stock-outs — which is the input the break-even calculation above needs. Price history shows you whether a cut is a promotion or a move. There is a suggested price from a rule you set, and you decide: Pricemastr never changes prices in your store. CSV export and on-demand re-checks come with Pro and above, Slack or Discord delivery with Max. Basic is free, Pro is $39 a month, Max is $99 — all on the pricing page.

If you are not sure whether the gap is real, test where your prices actually sit before you change anything.

Run the break-even first. If you still want to see undercuts the morning they happen, start free.