Loss Leader Pricing Definition

Loss leader pricing is a pricing strategy where a company offers a product at a low price in order to attract customers and increase sales. The company then hopes to make up for the low prices by selling other products to the customer at a higher price.

Loss leader pricing can be an effective way to increase sales and market share, but it can also lead to losses if not managed properly. For example, if a company offers a product at a loss but the customer does not buy any other products, then the company will lose money on that sale.

To avoid this, companies need to carefully consider which products they will offer at a loss and make sure that they have other products that they can sell at a higher price point. They also need to track their sales and losses closely to ensure that they are making up for the losses with increased sales of other products.