1. Identify killer products where it pays out to be the cheapest on the market. Then make sure you stay the cheapest. Your profits will suffer, but we will make up for it a bit later…Further, you will gain loads of new customers who will like you for your cheap offers.
2. Identify accompanying products which go along with the killer ones. Here is your chance to make it up for the profit lost in 1) Example: if your killer product is skis, then your accompanying product could be boots.
3. Do not try to “outprice” all your competitors for the whole product range. Taking prices down so low is a one-way street. Raising prices is psychologically very unpopular – and your customers will notice it. Instead, better focus on killer products and make sure you stay the cheapest in that niche.
4. Do not panic if your competitor(s) have “outpriced” you. Better check if that is a limited offer / sale / promotion, and what is behind it. It could be that your competitors have renegotiated their supply contract? Why not renegotiate yours?
5. Track not only competitor prices, but competitor stock / product availability as well. Here is another chance for increased profits – when competitors get out of stock, there is your chance for a swift price increase.