How can I set-up prices in my very small e-commerce store some pecent lower than my competitor which sells same products?

Answer by Syama Meagher:

Look at your margins, and operating cost. How much can you afford to discount? Also, what incentives can you offer over your competitors: Free Shipping? 7 day return? These things cost money too, not just knocking off 10-15%, and can be better triggers to purchase. Everyone loves FREE SHIPPING.
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