Eh, I make a difference between undercutting and advertising.

Alot of the folk that 'undercut' you by 1 or 2 gil aren't really undercutting. They want to sell for the same value, what they're actually just doing is taking your 'advertising' space from you by gaming the board and ensuring their 'product' is on top of the 'cheapest' register.

That's all it is.

Actually 'undercutting' (Aka dropping the price by 10 percent onwards) is something I don't do, because it's stupid. You're killing your own profits, that's all there is to it. Yours, and whoever else wants to sell his stuff. All that accomplishes is that people can buy cheap, and that you lose revenue because of it.