The short, but correct, answer is that there's only one way to know for sure... A/B test it.

If there's not a lot of seasonality to your products, or even if there is, just pick a month where sales will be normal or slow. Try stopping ads for 2 weeks and lowering prices. Then bring back ads for 2 weeks. Compare. Maybe try stopping ads and NOT lowering prices. Or lowering them some, but not as much as you could. 2 weeks on, 2 weeks off. Or maybe do 1 week increments even if it's not too much of a pain.

So we sell broadly within one category. Some of our items are the first thing that pop up in organic search under an even slightly specific search. We DON'T sell t-shirts, but if we did it'd be like the equivalent of us being right at the top for "polyester t-shirt" or something, but not "t-shirt" in general. Then under other things with that level of specificity we DO NOT come up first, but on page 3-4-5. So not great. So the equivalent of being buried for "cotton t-shirt" or something similar. BUT if you search the equivalent of "red cotton t-shirt" we come up at the top again. That product sells pretty well, with zero advertising, frequently cracking the top 100 for the category. I think it's 99% because once somebody adds one extra keyword, like color, we do well in organic search.

We have other items that don't sell that great, and some of that may be because we don't advertise them and they don't get enough action from the slightly more specific searches where they come up with better placement. But I don't think it's worth it for us to try to FORCE them to sell well by throwing money at them, because then we'd end up in a situation like yours where it's hardly even worth it. High Gross used to interest me when I was younger, but nowadays I only care about the NET!

We DO run ads on some stuff, but small dollar amounts. A number of things we literally do a $1.00 a day campaign just to give them a little lovin'. With our margins the direct revenue generated seems to be essentially break even. It really doesn't make us more money than not advertising, but it seems to pay for itself. BUT I figure the increased volume probably helps organic placement, and they sometimes make the top 100 etc, so since it isn't losing me money why not keep it going? If we had a solid positive return I would advertise more, but our items are low priced and the CPC just adds up too quick. I just don't see where it could be worth it.

So you should really just look at how your items come up organically for the "generic" searches for your product, and then how they come up once you get slightly more specific also. Maybe you'll net just as much lowering prices a small amount, but not as much as you're presently spending on ads, and selling a lower volume. You just have to A/B test it, and work the numbers against your specific product and margins.

ALSO keep in mind MAYBE advertising a smaller number of your products, more targeted, or with lower bids etc might create more cost efficient advertising for you. If you're already at the top organically for certain searches, you don't need to pay for THOSE searches, but maybe there are other related ones where you don't have high organic placement that would be worth paying for.

I'd try a simple on 1 or 2 weeks off 1 or 2 weeks on test first though. If sales tank too much you can try refining advertising.