Loss leader

Definition

A loss leader is a pricing strategy where a product is sold at a price below its market cost to stimulate sales of more profitable products or services. This approach aims to attract customers in the hope they will purchase other items with higher margins.

Related terms

Price Skimming: A strategy where a high price is set for a new product initially and then gradually lowered over time.

Cost: Plus Pricing - A pricing strategy where the selling price is determined by adding a specific markup to a product's unit cost.

Market Penetration Pricing: Setting a low price for a new product to attract a large number of buyers and gain market share quickly