Loss Leader Pricing Strategy

A loss leader is an item priced beneath or at market value but potentially gets customers in the door to then purchase other items which are priced to make a profit. Printers for example, are sold for a bargain but are a one time purchase. The ink used by the printer is usually less of a bargain and generally new ink cartridges have to be purchased periodically to replace the previous one which eventually runs out of ink if the printer is being used regularly. Thus, although the printer company might lose money (or simple break even or not make much) in the beginning selling the printer, in the long run they will come out ahead due to the profitability of the ink. There are many other examples of using loss leaders as a pricing strategy and it has been a success in many cases.