What is undersell?

Point of Sale (POS) Glossary

Undersell is when a retailer offers an item for a lower price than competitors. In some cases, a merchant may even price items below their acquisition cost to edge out a competitor or build loyalty to their store.

When a store decides to undersell an item, they may simply price it at a lower amount. Alternatively, they may set up sales and discounts with the item marked higher, but the actual cost at the point of sale register is lower after promotions. Deals such as buy one, get one free (BOGO), percentage discounts or other schemes applied by the POS during checkout can sometimes be more effective than just setting a low price.

Underselling can be tricky because it may cause competitors to discount their pricing on more items to compete and result in spiraling prices. Customers may also come to a store to cherry-pick the things that have been adjusted to below retail and not buy anything else.