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Definition: By-Product Pricing is a pricing strategy in which a secondary, by product has significant value and the manufacturer achieves an advantage by recovering some of its expenses by selling the by product. Sometimes the profits are used to reduce the price of the primary product.
By-products are typically produced as a result of producing something else (the main product). Normally byproducts are considered waste and simply disposed off because they have little or no value.
One might distinguish: main products, co-products (which involve similar revenues to the main product), by-products (which result in small revenues), and waste products (which provide little or no revenue).