Sawtooth Pattern

The Sawtooth Pattern detects a specific pricing cycle where the price gradually drops as sellers undercut each other, then sharply resets upward — often when one or more sellers exit or raise prices. This pattern looks like the teeth of a saw when charted.

What It Measures

This metric scans the price history for repeating sequences where:

1. The price declines gradually over a period (the "drop").
2. The price then jumps back up sharply (the "reset").
3. The cycle repeats multiple times.

It counts how many of these cycles occurred, how regular their timing is, and whether they correlate with sellers entering or leaving the listing.

Why It Matters for Resellers

A sawtooth pattern reveals a predictable competitive dynamic:

• During the drop phase, sellers undercut each other, driving the price down. Margins get thinner.
• During the reset phase, someone gives up or runs out of stock, and the remaining sellers raise prices. Margins recover.
• Regular patterns are exploitable. If you can predict the cycle, you can time your purchases to buy at the bottom of the drop and sell after the reset.

How We Calculate It

1. We scan the price history for points where the price drops by at least a meaningful amount (both in percentage and absolute terms).
2. We look for sharp recoveries following these drops.
3. We require at least 3 significant price drops from peaks to confirm a pattern. Resets are measured when detected but are not required for initial pattern detection.
4. We check if the cycles are evenly spaced (regular) or randomly timed (irregular).
5. We check whether price drops correlate with sellers entering the listing within an adaptive time window, which would suggest competitive undercutting as the cause.

How to Read the Results

| Classification | What It Means | |---------------|---------------| | Not detected | No sawtooth pattern found. Prices move without a repeating drop-and-reset cycle. | | Regular pattern | A consistent drop-and-reset pattern is repeating at regular intervals. You can time your purchases to buy when prices have dropped and sell after the reset. | | Irregular pattern | A drop-and-reset pattern exists but the timing is unpredictable. The cycle happens but you cannot reliably predict when the next reset will occur. |

Limitations & Caveats

• Requires at least 3 significant price drops to confirm the pattern. Products with shorter histories or fewer drops will not trigger detection.
• Regular does not mean clockwork. Even "regular" patterns have some variation in timing. Use the average cycle length as a guideline, not an exact schedule.
• The pattern can stop. If the competitive dynamics change (e.g., a dominant seller locks in the buy box or the market consolidates), the sawtooth cycle may not continue.
• Correlation with seller entry does not prove causation. The price drops may coincide with seller changes for other reasons.
• Small price drops are filtered out. Drops below the minimum percentage and absolute thresholds are not counted, so very subtle cycles may go undetected.

Related Metrics

• Race to Bottom — A sawtooth pattern with drops that do not reset may indicate a more serious price war.
• Price Velocity — Tells you the current speed and direction of price changes within a cycle.
• Seller Concentration — Sawtooth patterns are common on listings with moderate competition where sellers actively compete on price.