You have just noticed that a direct competitor has lowered its price on one of your flagship products. Before reacting in a rush — and sacrificing a margin you could have preserved — use this five-step checklist to make the right decision methodically.

Step 1 — Check that the price drop is real, not just a promotional claim

A crossed-out price far above the usual price, or an advertised discount that does not match the price charged at checkout... misleading promotions are common. First, confirm the actual selling price, rather than just the percentage displayed beside it.

Step 2 — Work out your minimum margin for this specific product

You cannot decide confidently without knowing the price below which you will not go for this product. If you have not set that limit in advance, calculate it now — purchase cost, logistics costs and minimum acceptable margin — before even looking at the competitor's price.

Step 3 — Determine whether the drop is temporary or lasting

A price reduction lasting several weeks calls for a different response from a 48-hour promotion. If you have price history for this competitor, now is the time to consult it: a recurring reduction deserves a structural adjustment, while a one-off promotion may simply need monitoring.

Step 4 — Decide: match, differentiate or ignore

There are three possible responses, and matching the price is not always the best:

Step 5 — Document the decision for next time

Record your decision and the reasons behind it: the same situation will happen again, and a history of your own decisions prevents you from starting from scratch with every new alert.

This checklist assumes you have already spotted the problem. If that is not yet a habit, our article on the warning signs of a pricing problem is a good starting point, and our complete guide to price monitoring explains how to organise tracking over time.

Comparzeo automatically alerts you when a competitor changes a price, so you no longer have to look for the problem yourself — free 14-day trial.