Startup words, jargon and slang, business english

What is Loss Leader Pricing?

Loss Leader Pricing means that a company is selling a product with a very low price, often at loss, in order to get customers interested hoping they will purchase more items with a higher profit margin.

Loss Leader Pricing can be used to build a loyal customer base with the plans of increasing the price later or to sell a product, which requires a lot of additional products, which can later be sold at a profit.

Example of Loss Leader Pricing?

For example, printers are often sold below the price, and the company makes a profit on selling ink and paper.
It is a very aggressive pricing model and is banned in many countries, as it puts smaller businesses at a significant disadvantage since they simply cannot afford to sell certain products at a loss.

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