If it feels like more businesses are running sales lately, you are probably not imagining the broader shift toward value. Deloitte’s 2026 retail research found that four in ten Americans show deal-driven or cost-conscious behavior, including some higher-income households, but the same research found that value is shaped by more than price alone. Quality, service, convenience, loyalty, and the buying experience can all influence whether customers believe something is worth the money. (Deloitte)
That creates a difficult situation for a small business. When a competitor starts offering 20% off, free shipping, a cheaper package, a loyalty deal, or a bundle, matching the offer can feel safer than doing nothing.
Before you follow them, though, figure out what job their promotion may be doing and whether your business has the same problem. A competitor’s sale is information, but it is not an instruction.
The Same Discount Can Be Doing Five Different Jobs
Imagine you own a small home and gift store. A nearby competitor that rarely discounted anything starts advertising 25% off selected merchandise every Thursday.
You could conclude that customers have become more price-sensitive and match the sale. The competitor could also be trying to clear aging inventory, increase traffic on a slow weekday, introduce new shoppers to the store, make room for a seasonal shipment, or raise the average purchase by discounting one category.
From the outside, all you can see is 25% off. You cannot see the business problem behind it.
That distinction matters because the right response depends on what is happening inside your own business.
| What you are seeing | What the promotion might be trying to do |
|---|---|
| 20% off everything on Tuesdays | Increase traffic on a weak day |
| Buy two, get one discounted | Increase units per transaction |
| Lower-priced starter package | Give new customers an easier way in |
| End-of-season sale | Clear inventory |
| Loyalty-member offer | Increase purchase frequency |
| Free add-on | Increase perceived value without lowering the main price |
| First-order discount | Reduce the risk of trying the business |
| End-of-day food offer | Recover value from perishable inventory |
You may eventually choose a similar tactic, but you should be able to explain why it makes sense for your business first.
Before You Match the Sale, Look at What Your Customers Are Doing
Suppose your competitor runs 25% off and your own revenue has also softened. The discount begins to look even more tempting.
Take a closer look before deciding that price is the problem. Your revenue can fall because fewer customers are coming, existing customers are visiting less often, people are spending less each time, one product category is weakening, or a normally strong day has become slower.
Those situations can look similar in the bank account while requiring very different responses.
If customer traffic is healthy but people are choosing less expensive products, value and price deserve closer attention. If customers are spending normally but Tuesday traffic collapsed, discounting your busy Saturday may give away margin without addressing the problem.
The first AI task should therefore be diagnosis, not promotion writing.
I am considering matching a competitor’s promotion. Before suggesting a discount, help me determine what problem my business appears to have. I will give you information about customer volume, average purchases, repeat customers, slow days or products, customer questions, recent business changes, and the competitor offer. Separate what the evidence shows from what we are assuming, and tell me what additional information would most improve the decision.
That prompt moves the discussion away from “What sale should I run?” and toward “What am I trying to change?”
AI Can Help You Study Competitor Offers Without Copying Them
Competitor research becomes more useful when you track changes, rather than taking a single promotion at face value. Save screenshots, emails, public social posts, website offers, loyalty promotions, and pricing changes you notice over several weeks.
Then give the public information to AI and ask it to organize what changed. You are looking for patterns such as frequency, timing, product categories, discount depth, new bundles, lower-priced entry offers, loyalty incentives, and whether the same promotion keeps returning.
A useful request might be:
Here are public promotions from several competing businesses over the last eight weeks. Organize them by type, timing, product or service, discount level, restrictions, and whether the offer appears repeatedly. Do not claim to know why a competitor launched a promotion. Instead, give me several business purposes that could reasonably explain each pattern and tell me what I should compare with my own business before responding.
The distinction in that last instruction matters. AI can help you interpret a pattern, but it cannot see a competitor’s margins, inventory, cash flow, customer mix, or internal strategy unless that information is public and provided.
A competitor that looks desperate may be running a planned customer-acquisition program. Another business that appears to be thriving may be discounting aggressively because it has too much inventory.
Treat the promotion as a clue.
Customers Looking for Value Does Not Automatically Mean “Lower the Price”
The current value-seeking environment makes pricing decisions more complicated because customers can become more selective without becoming purely price-driven. Deloitte’s retail research estimates that non-price factors can account for a substantial share of how consumers perceive brand value, while its restaurant research similarly points to quality, service, convenience, and execution as important parts of the value equation. (Deloitte)
That means a customer asking, “Do you have anything less expensive?” deserves attention, but it does not automatically tell you what to change. They may want a smaller option, a simpler package, more flexibility, clearer value, or a different way to buy.
AI can help look across customer questions and reviews to see what appears repeatedly.
Analyze these anonymized customer questions, reviews, and comments for signals about value. Look separately for price, quality, convenience, service, package size, flexibility, trust, and what customers say makes the purchase worthwhile. Distinguish direct customer statements from interpretations, and identify any pattern strong enough to investigate before we change pricing.
That can reveal a different opportunity than a blanket sale.
A retailer may learn that customers love a premium product but want a smaller version. A consultant may discover that prospects want a narrower starting engagement, while a restaurant may find that customers are comfortable with menu prices but respond strongly to bundles that make the overall meal feel more worthwhile.
Run the Numbers Before You Celebrate a Promotion
A promotion can increase sales and still leave the business worse off. The important question is not only how many more units you sell, but what happens to the money left after the discount.
Consider a simple illustrative example. You sell an item for $50, and the variable cost associated with that item is $20, leaving $30 before other business expenses.
A 20% discount brings the selling price down to $40. With the same $20 variable cost, the amount left from each sale falls from $30 to $20.
That means you would need to sell roughly 50% more units just to generate the same amount from those sales before considering additional labor, transaction fees, marketing costs, or other effects.
This does not mean a 20% promotion is bad. It means “sales went up” is not enough information to decide that it worked.
AI can help run scenarios when you provide the real numbers.
My regular price is [price], my approximate variable cost is [cost], and I am considering [discount or offer]. Calculate how the amount left per sale changes, how many additional sales would be needed to match the current contribution from this product or service, and show the assumptions used. Then identify other things I should watch, such as full-price sales, customer mix, repeat purchase, capacity, or products customers buy alongside the promotion.
The calculation is useful because it gives the promotion a hurdle. You know what has to happen for the lower price to make financial sense.
Be Careful With Customers Who Would Have Bought Anyway
Suppose your home-goods store normally sells 40 candles on Saturday at full price. You run 20% off and sell 46.
The promotion produced six additional purchases if all else were equal, but it also discounted the other 40 purchases that may have happened anyway. Without looking at the economics, “46 candles sold” can make the promotion look far more successful than it was.
This is especially important with regular customers. A loyal customer using a coupon does not automatically mean the coupon caused the purchase.
AI can help you think through that possibility before the test:
Assume that some customers receiving this promotion may have purchased without it. Give me three ways to design a small test that helps distinguish additional demand from customers simply using the discount on purchases they would have made anyway. Keep the test practical for a small business and explain what information I would need to collect.
You may not be able to run a sophisticated experiment, and that is fine. Even limiting the offer to a genuinely slow period or a specific customer group can teach you more than discounting everything for everyone.
Sometimes the Better Response Is Not a Discount
A competitor’s promotion may expose a useful question without requiring you to copy the promotion.
If customers want a more affordable way to buy, you could test a smaller version, starter package, bundle, loyalty reward, payment structure, or lower-priced entry option. If the problem is a slow Tuesday, the answer might be a Tuesday-specific reason to visit rather than a permanent reduction in price.
Restaurants face this challenge frequently. Deloitte notes that repeated discounting can create a difficult cycle in which promotions lift demand but compress margins and may increase customers’ sensitivity to price, while approaches such as targeted promotions, bundles, tiered options, and portion adjustments can sometimes strengthen value without relying on broad price cuts. (Deloitte)
A small business can apply the same principle without copying a large chain. The question is whether you can improve the customer’s value equation while protecting the parts of the business that are already working.
Ask AI to compare the options:
The business problem we are trying to solve is [describe it]. Compare a direct discount with three non-price alternatives that could address the same problem, such as a bundle, smaller option, added convenience, loyalty benefit, limited-time product, or improved communication of value. Explain what each option is trying to change, the likely risk, what we are assuming, and how we could test it on a small scale.
That gives you choices instead of automatically turning price into the lever.
A Deal Can Change Customer Behavior in Ways You Did Not Intend
Promotions do more than change today’s transaction. They can also teach customers when and how to buy.
If a boutique runs 30% off every few weeks, regular customers may learn to wait. If a service business constantly sends “last chance” offers, urgency may become less believable, while a restaurant that discounts the same slow evening each week may eventually create a useful new habit or simply shift customers who would have come another day.
You will not know which outcome you have from redemption counts alone.
Ask AI to think about the behavior surrounding the sale:
We are considering repeating this promotion. Identify the customer behaviors we should watch beyond immediate sales, including whether purchases shift from full-price periods, customers wait for future deals, average purchase changes, new customers return, or the promotion creates a new buying occasion. Tell me which behaviors would make the promotion more valuable and which would make it less attractive over time.
This is where AI becomes much more useful than a coupon-writing tool. It can help you think through second-order effects before they become habits.
Try the Smallest Version That Can Teach You Something
If the idea still looks promising, test it without changing your entire pricing strategy.
The home-goods store does not need 25% off everything for a month. It could test one slow Thursday, one product category with too much inventory, or one customer segment where there is a clear reason to act.
Before launching, decide what success means. More revenue is one possibility, but the real objective could be reducing leftover inventory, increasing transactions during a weak period, attracting first-time customers, increasing the number of items per purchase, or bringing former customers back.
Also choose a guardrail. A promotion that increases units but destroys margin, overwhelms staff, creates complaints, or pulls customers away from full-price days may not be worth repeating.
| Decide before the test | Example |
|---|---|
| Problem | Thursday traffic is weak |
| Test | Bundle on Thursday only |
| Desired change | More Thursday transactions |
| Guardrail | Do not reduce average gross contribution below target |
| Watch for | Whether Friday/Saturday purchases shift to Thursday |
| Review | Compare with normal Thursdays and surrounding days |
A small test gives you something a competitor’s promotion never can: evidence from your own customers.
Bring the Results Back to AI
Once the promotion ends, resist the temptation to look only at revenue or redemption count. Give AI the baseline, the promotion period, the margin assumptions, customer mix, average purchase, full-price sales around the test, and anything customers said.
Then ask it to compare what happened with what the promotion was supposed to accomplish.
We ran this promotion because we believed [problem]. Before the promotion, our normal result was [baseline]. During the test, we saw [sales, transactions, average purchase, margin estimate, customer mix, and other relevant observations]. Compare the result with the objective and guardrails we set in advance. Tell me what improved, what got worse, what remains uncertain, and whether the evidence supports repeating, revising, or stopping the promotion.
That prevents the after-the-fact story from changing simply because the sale felt busy.
A crowded store can feel like success. The numbers may tell you that customers mostly moved purchases from Saturday to Thursday and paid less for the same amount of merchandise.
Do Not Let AI Make the Pricing Decision for You
AI can organize competitor offers, analyze customer language, calculate scenarios, identify alternatives, design a test, and compare the results. Those are useful jobs because they help turn a stressful pricing decision into something more structured.
It still does not know everything that matters. Your cash needs, brand position, supplier terms, staff capacity, customer relationships, and tolerance for risk may change what makes sense even when the numbers look similar.
Use AI to make the tradeoffs easier to see. Keep the decision with the business.
A Competitor’s Sale Should Make You Curious, Not Nervous
Seeing businesses around you discount more aggressively can create pressure to react. When customers are more value-conscious, ignoring what is happening around you would not make sense either.
The better response sits between those two extremes. Pay attention to competitor offers, look closely at how your own customers are behaving, understand what problem you are trying to solve, and test the smallest response that can give you useful evidence.
Sometimes the answer will be a discount. Other times it will be a bundle, smaller option, stronger explanation of value, loyalty benefit, slow-day offer, inventory adjustment, or no change at all.
The strongest pricing decision is not the one that copies the market fastest. It is the one that gives your customers a better reason to buy without unnecessarily giving away what they were already willing to pay for.
Use the Pricing + Promotion Decision Check
The Should You Match the Deal? AI-Assisted Pricing + Promotion Decision Check walks through the questions to answer before lowering a price or copying a competitor’s promotion. It includes a ready-to-use AI prompt and a worksheet for identifying the problem, thinking through the cost, and designing a small test.
The resource uses the same approach as this article: start with what is happening in your business, not with the promotion you happened to see somewhere else. That makes the decision more useful whether you eventually choose to discount or decide another response fits better.