I rarely get "undercut". I don't list my item at the lowest price. Look at the number of items available, find the median, average out the prices, and find a good middle to list your item. The only exception to this is a huge difference in price from low to high (such as 10k to 40+k). Lower prices are going to go very quickly in most markets, so it's better to list your item low-middle and just be patient.

On a side note, undercutting is NOT what's killing the market. High supply causes drops. Perfect example are WP items. Items in there could easily go for 20-30k+. Soon as they made it give better rewards, everyone started farming it. Supply goes up, prices go down.