Loss Leader

Definition: Loss Leader is a promotional pricing tactic where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services. With this sales promotion/marketing strategy, a "leader" is typically any popular article which is sold at a low price to attract customers. The seller expects that (some/many/most) customers will purchase other items along with the loss leader and that the profit made on these items will be such that an overall profit is generated.

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More on pricing: By-Product Pricing, Cost-based Pricing, Decoy Effect, Demarketing, Dynamic Pricing, more...

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