Loss Leader Pricing

Loss leader pricing is a method of sales promotion by lowering the price of the product to entice people into the store.

The money lost on the loss leader will be made up on other products purchased in the store.

Advantages

• It will encorage people to enter your store
• You may make up the profit on other items
• Changing loss leader will entice different people

Disadvantages

• You will make a loss on the loss leader
• People may not purchase other products
• People can buy the loss leader in bulk

Examples

• Selling a product at a reduced rate for a short period
• Using 2 for 1's and bogof deals
• selling a product cheaper with a large shop