Underprice

To set a price for a product or service that is lower than its true value or what is considered standard in the market. This can be done intentionally as a marketing strategy to attract customers or unintentionally due to miscalculations or a lack of understanding of market dynamics. Underpricing often leads to increased demand in the short term but can result in reduced profitability, perceived lower quality, or supply chain issues if not managed carefully. This can lead to a loss of market share from other competitors. It needs a well though out business plan to successfully accomplish.

Underprice meaning with examples

• The new coffee shop deliberately *underpriced* its lattes and cappuccinos during its grand opening to draw in a large customer base. The lower prices caused a huge influx of people eager to try their drinks, and caused the shop to be very busy. They gained a lot of customers in a short time.
• Due to a recent surge in manufacturing costs, the company realized they had *underpriced* their new line of gadgets. The product was well-liked and customers loved the gadgets but the company's margins were much smaller than expected, which put pressure on profits.
• In an effort to compete with online retailers, the local bookstore had to underprice most of its books. The company realized a great benefit. While this tactic brought in more customers, it ultimately created a very slim profit margin, so the tactic needed reevaluated.
• The auction house *underpriced* the antique vase, failing to account for its rarity and historical significance. The vase was sold well below its estimated value, much to the disappointment of the seller. The buyer was happy because they got a great deal.