“I can’t believe they matched our pricing,” Sarah said. “We have taken great pains to reduce our cost structure, so we can offer a low price without cutting our margins. I know our competitor isn’t willing to make the changes we have made, so they must be trying to buy the business. They probably don’t even know they are losing money.”

“Why don’t you call and tell them,” I asked.

Sarah laughed. “If they are losing money, why should we tell them?”

“And what if they are not losing money? What if, while you were cutting your costs in one way, they were cutting costs in a different way? So, you both show up at the same price point?”

“Impossible,” she replied.

“Two questions,” I said. “How are you going to find out? And, when you do find out, what are you going to do about it?”