Panic! No, don't panic there are alternatives. Seth Godin has a brilliant idea, a simple alternative to slashing your prices. Engage your customer with the current price, understand their interest and needs...and then if you feel they need a lower price, offer a discount on the spot. You will have opened the door to a better chance at the sale and demonstrated your ability to accommodate the customer's need.
Envisioning this situation in my recent purchase of a notebook computer, I would have agreed to a slightly lower price if presented with the approach Seth suggests. Ultimately I bought the notebook at a different place...when I found the price I was hoping to reach.
The sky is not falling all around you, there are alternatives.