We have had this type of thing happen to us as well - you can't suddenly match a price like this (even if it is possible without losing money) because your credibility goes down the tube. You can be sure the ad agency would spread the word too that they were able to beat you down from your established price - this potentially will lead to more problems in the future. You will also create a bad feeling with the end user when they perceive that you have been "overcharging" your work in the past. Swallow the pill and move on - with any luck - they will be back when the new printer can't match your service and quality. We have to establish a price that covers our costs AND provides a reasonable profit level - or soon we are out of business. If we can't attract enough business to be profitable and healthy - then we need to change what we are doing (different equipment, different operating methods etc. etc.). If that's not possible - then we can't be in business.