Guide
Conventional wisdom says that automated repricing triggers a death spiral — everyone keeps undercutting until profit disappears. The data says otherwise. When repricing is governed by a hard floor, roughly half of all repricing events move prices upward, not down. The race to the bottom is not a law of markets; it is an artifact of floorless tools. This guide explains exactly how price floors work, how to calculate one that protects real margin, and how Undercut enforces it automatically on every listing.
The term "race to the bottom" describes a feedback loop: seller A drops to $19.99, seller B drops to $19.89, seller C drops to $19.79, and so on until everyone is selling at cost. This loop is real — but only when no participant has a floor. The moment even one seller holds a floor, the loop stops at that price. When most sellers in a category have floors (even informally), the price distribution stabilises well above cost. Internal repricing data from floor-governed accounts consistently shows that close to half of all repricing events are upward adjustments. When a competitor sells out, raises their price, or leaves the listing entirely, Undercut moves your price back up toward your ceiling automatically. Without a floor, you only see downward moves. With a floor, you capture upward moves too.
A floor is only protective if it accounts for every cost layer. Most sellers undercount because they forget that eBay fees apply to the total buyer payment including shipping. Here is a worked example for a common resale item:
Cost of goods: $8.00 Shipping cost: $4.00 eBay final value fee (13.25% of item + shipping): $1.59 PayPal/managed payments processing: included in eBay fee for most sellers Target minimum net margin: 15% of sale price
Floor calculation: (Cost + Shipping + Fixed fees) / (1 - Fee% - Margin%) = ($8 + $4) / (1 - 0.1325 - 0.15) = $12 / 0.7175 = approximately $16.73. Round up to $17.00 for a clean floor.
At $17.00, after fees and shipping, you net just above your 15% minimum. Every cent above $17.00 is incremental margin. Every repricing event Undercut makes will stay at or above this number — it is enforced at the rule level, not just as a soft guideline.
Undercut checks the lowest qualified competitor price on a schedule (every 15 minutes on both Pro and Scale) and sets your price to beat it — subject to two hard limits: your ceiling and your floor. The floor is not a preference or a warning; the repricing engine will not write a price below it regardless of what competitors do. If the lowest competitor drops below your floor, your price stays at your floor. You do not follow them down. You also do not have to monitor the situation manually.
This matters most in volatile categories like consumer electronics and seasonal goods, where a single liquidating competitor can temporarily crater the visible price on a listing. Without a floor, your tool follows them into unprofitable territory. With Undercut, you hold position and wait for that seller to sell through their stock — then Undercut moves your price back up when the competitive floor rises again.
The right floor strategy varies by what you sell. Electronics resellers face thin margins and fast price swings — floors should be recalculated every time a supplier invoice changes, and aggressiveness should be tuned conservatively (the Pro and Scale plans' AI tuning helps here). Clothing and shoes sellers deal with size-level inventory, meaning a floor set at the category level can be wrong for a specific SKU that has higher return rates; set floors at the variant level when possible. Book sellers often have predictable cost structures ($0 for remainders, fixed for used grades) and benefit from tight floors set close to cost plus a small buffer. Collectibles and vintage sellers should set floors based on their acquisition price plus a meaningful margin premium — these categories have inelastic demand and frequent upward price moves when comparable items sell. In all cases, the floor is a per-listing input in Undercut, not a global override, so each category can carry its own logic.
Most repricing margin problems come from one of four errors. First, setting no floor at all — the tool has nothing to anchor to and follows competitors indefinitely. Second, setting a floor based on sale price alone without subtracting fees and shipping, which makes the floor an illusion. Third, setting a single global floor for an entire account when individual SKUs have different cost structures. Fourth, forgetting to update floors when costs change — a floor set six months ago may now be below actual cost if supplier prices or postage rates have risen. Undercut lets you update a listing's Floor Price in the dashboard the moment a cost changes, so a supplier increase is reflected on the affected SKUs before the next reprice cycle runs.
Start a 14-day free trial — no credit card required. Protect every listing with a hard floor from day one, and stop leaving margin on the table when prices move up.
Start freeDrop your email — we'll send early access and founding pricing.
What happens if a competitor drops below my floor — does Undercut follow them down?
No. If a competitor's price falls below your floor, Undercut holds your listing at your floor price. The engine will not write a price below the floor under any circumstances. When that competitor's price rises again — or they sell out — Undercut will move your price down toward the new competitive level, as long as it remains above your floor.
Can I set a different floor for every listing, or is it one setting for my whole account?
Floors are set per listing. Each SKU can carry its own floor reflecting its specific cost, shipping, and margin target. You set each listing's Floor Price through the dashboard, calculating it from that item's own cost. There is no single account-wide floor that would override individual settings.
How do I calculate a floor that actually protects margin after eBay fees?
The safest formula is: Floor = (Cost of goods + Shipping cost) divided by (1 minus eBay fee percentage minus your target margin percentage). For a $12 all-in cost with a 13.25% eBay fee and a 15% margin target, that works out to approximately $16.73. Round up and set that as your floor. Recalculate whenever your costs change.
Does having a floor mean I'll win fewer sales because I'm not always the cheapest?
A floor means you will not win sales that would cost you money to fulfil. In practice, most eBay shoppers do not select the absolute cheapest listing — reviews, seller feedback, shipping speed, and listing quality all influence the buy. Undercut keeps you competitive within the range where you can profit, rather than winning every sale at a loss.
Will repricing software keep dropping my price even on slow-moving inventory that I'd rather hold?
Only if you let it. Undercut respects your floor absolutely, so slow-moving inventory will sit at the floor rather than being repriced below cost. If you want to clear aged stock deliberately, you can lower the floor temporarily for specific listings, then restore it. The tool does not make liquidation decisions autonomously.
Related: How to Avoid Selling Below Cost on eBay · What Is a Price Floor? · eBay Seller Fees Explained · eBay Pricing Strategy Guide · Manual vs Automated Repricing