Which pricing strategy involves selling an item below cost to stimulate other profitable sales?

Which pricing strategy involves selling an item below cost to stimulate other profitable sales?

• A. Bundle pricing
• B. Loss leader
• C. Predatory pricing
• D. Price skimming

Answer: (B)

Loss leaders are pricing a product below cost to attract customers into the store or website, with the expectation that they will buy additional, higher-margin items once there. This approach uses the lure of a very low-priced item to drive overall profitable sales through upselling and cross-selling. It’s distinct from bundle pricing, which discounts a group of items together but not necessarily below cost; predatory pricing aims to push competitors out of the market by undercutting prices, not to boost purchases of other products; and price skimming starts high to capture early adopters and then lowers the price over time, not to stimulate sales of other items through a loss-leading product.

Loss leaders are pricing a product below cost to attract customers into the store or website, with the expectation that they will buy additional, higher-margin items once there. This approach uses the lure of a very low-priced item to drive overall profitable sales through upselling and cross-selling. It’s distinct from bundle pricing, which discounts a group of items together but not necessarily below cost; predatory pricing aims to push competitors out of the market by undercutting prices, not to boost purchases of other products; and price skimming starts high to capture early adopters and then lowers the price over time, not to stimulate sales of other items through a loss-leading product.