Pricing Glossary
Undercutting means pricing your listing below the current lowest competitor to win the sale. On eBay, where buyers sort by price + shipping and the cheapest active listing gets the click, undercutting is the default competitive move. Done with a hard floor—a per-item minimum that covers cost, fees, and target margin—it's a durable strategy. Done without one, you enter a race to the bottom where every seller cuts until nobody profits. The difference between those two outcomes is almost entirely about whether your floor is set before you start repricing.
Undercutting is the act of pricing an item at least $0.01 below the next-lowest identical or equivalent listing. On commodity marketplaces like eBay, where multiple sellers often list the same SKU, the cheapest option wins the visible top spot when buyers sort by price. A single penny can be the margin between a sale and none—this is called penny-undercutting. More aggressive sellers drop by a fixed percentage (say 1–3%) to ensure they stay clearly ahead even after rounding. The tactic is rational when your cost structure supports it: if your landed cost is $8.00 and the current floor listing is $14.99, dropping to $14.98 captures the sale while keeping $3–4 in margin after eBay's ~13.6% final value fee plus the $0.30 per-order charge.
Penny-undercutting is the purest form: every seller in the stack prices $0.01 below the next. On a $20 item, the difference is negligible to the buyer but meaningful in aggregate for sellers competing at volume. The problem emerges when sellers react to each other in loops: Seller A drops to $19.99, Seller B drops to $19.98, Seller A reprices again to $19.97—within hours the price can collapse to near-cost with no one benefiting. Manual repricing makes this slow; automated repricing without a floor makes it instantaneous and catastrophic. eBay's final value fee of roughly 13.6% on the total amount means a $20 listing already carries a $2.72 fee before shipping costs. Penny-undercutting without floor logic erases that buffer fast.
Undercutting is the right move on commodity listings where your cost structure is lower than the market. If you sourced a popular electronics accessory for $6 and competitors list at $18.99, you can undercut to $17.99, earn solid margin, and still have room to defend if others react. It also works well when you have volume: even thin margins per unit add up across hundreds of daily sales. Undercutting fails when there is no cost advantage, when the market is already thin, or when the seller has no floor set. Without a floor, the repricer just chases the lowest listing indefinitely. A single low-ball competitor—perhaps someone liquidating at cost—can drag your price below breakeven before you notice. The fix is simple but mandatory: set a floor equal to your item cost plus eBay fees plus your minimum acceptable margin, and never let the repricer cross it.
Undercut reprices every listing to beat the current lowest competitor automatically, 24/7—but the floor is hardcoded per listing and the repricer will not cross it. If the market drops below your floor, your listing simply holds at floor price and stops competing on price alone. This is the structural difference from a race to the bottom: the floor acts as a circuit breaker. On the Free plan ($0), 25 listings reprice hourly. Starter ($29/mo) covers 100 listings at hourly cadence. Pro ($79/mo) covers 1,000 listings with 15-minute repricing and per-listing AI aggressiveness tuning that lets you set, per listing, how fast and how far it moves toward its floor. Scale ($199/mo) handles 10,000 listings with 15-minute repricing and priority support. Every account starts with a 14-day Starter trial—no card required—so you can set floors, watch the repricer run, and verify margin before committing. Annual plans include two months free.
Automated undercutting is a bad fit for handmade, one-of-a-kind, or differentiated listings where you are the only seller of that exact item—there is no competitor price to beat, only your own pricing judgment. It's also a weak fit if you haven't calculated per-item floors yet: running the repricer without floors is worse than manual pricing because it moves faster and more relentlessly. If your catalog has a mix of commodity and differentiated items, configure the repricer only on the commodity SKUs and manage differentiated listings separately. Undercut is designed to be simpler and cheaper than alternatives like StreetPricer, RepricerExpress, or Informed.co, but simpler doesn't help if the underlying floor math hasn't been done. Use the eBay profit calculator to validate your floor on each SKU before enabling repricing.
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What's the difference between undercutting and a race to the bottom?
Undercutting is a deliberate tactic: you price below competitors to win sales while your margin stays positive. A race to the bottom is what happens when multiple sellers undercut each other in a loop with no floor—prices collapse until none of them profit. The only structural fix is a hard per-listing floor set before repricing starts. With a floor, the repricer stops cutting when it hits your minimum; without one, it follows the market down indefinitely.
How do I set the right floor price on eBay?
Your floor should cover: (1) item cost including shipping to you, (2) eBay's final value fee—roughly 13.6% of the total collected amount including buyer's shipping—plus the $0.30 or $0.40 per-order fee, (3) your cost to ship the item out, and (4) your minimum acceptable margin, typically 10–20%. Add those four numbers together. That sum is your floor. If the current lowest listing is above that number, the repricer can undercut. If competitors are already below it, hold at floor and let them sell unprofitably without you.
Does Undercut undercut by exactly $0.01 or a percentage?
Undercut beats the current lowest competing price—the default behavior is designed to be the cheapest active listing. The specific undercut increment is small enough to win the position without sacrificing more margin than necessary. On most commodity listings, even a minimal price difference wins the sort position. The floor constraint is always enforced regardless of how the undercut amount is calculated.
Is automated undercutting worth it for low-volume sellers?
Yes, particularly on the Free plan which covers 25 listings at no cost. Even at low volume, 24/7 automated repricing captures sales that happen while you're offline—nights and weekends. The key condition is that your floors are set correctly first. A seller moving 5–10 units per day on commodity SKUs will see a measurable sales lift from always holding the lowest position, assuming their cost structure allows a competitive floor.
What happens when a competitor lists below my floor?
Undercut holds your listing at your floor price and stops competing on price. You won't lose money following a competitor who is selling at a loss or liquidating inventory. Once that competitor sells out or raises their price above your floor, the repricer automatically drops back to beat them. This is the core value of floor-first design: you sit out unprofitable price wars automatically instead of having to monitor and intervene manually.
Related: What Is a Price Floor? · Repricing Without Losing Margin · How to Avoid Selling Below Cost on eBay · eBay Profit Calculator