Undercutter

An undercutter is an individual or entity that sells goods or services at a lower price than competitors, often to gain market share or to eliminate competition. This strategy, while potentially beneficial for consumers through lower prices, can be unsustainable if profit margins are too thin. Undercutting can manifest in various industries, from retail and manufacturing to services like freelance work and online platforms. The practice can sometimes be viewed negatively, particularly if it involves predatory pricing or unethical business practices aimed at driving rivals out of business.

Undercutter meaning with examples

• The new online retailer quickly became an undercutter, offering significantly lower prices on electronics than established brick-and-mortar stores, forcing them to adjust their pricing strategies to remain competitive. This shift allowed consumers to benefit from the price wars, but led to concerns from the established businesses.
• In the construction industry, unscrupulous contractors sometimes act as undercutters, bidding on projects at unrealistically low prices, knowing they will later cut corners on materials or labor to maintain profitability, which damages quality and puts workers at risk. Ethical firms struggle to compete.
• A freelance writer acting as an undercutter might accept very low rates for their work, potentially damaging the market by driving down prices for everyone in the industry. While they gain short term projects, the long-term damage impacts earnings for others.
• During a recession, some airlines engaged in price wars, becoming undercutters to lure in dwindling customers, which could trigger industry-wide financial distress if not addressed promptly. They sacrificed profits to fill seats.