A Pricing Cycle

Here's a common dynamic in my projects ... see if this happens at your company.

1. Your average price point is $40.00.
2. Customer response is not good.
3. You offer 20% off plus free shipping.
4. Customer response improves.
5. Profit looks bad.
6. Finance and/or Merchandising doesn't like making no $ whatsoever.
7. Finance and/or Merchandising charges more for new items.
8. Customer response to expensive items is not good.
9. You offer 30% off plus free shipping.
10. Customer response improves.
11. Profit looks bad.
12. Repeat 6-11.

Briefly describe what the end-game looks like in this scenario ...