Loss Leader Concept

A loss chief is a product that drives clients by the hundreds of thousands into you retailer (bodily/on-line and so forth.) and includes promoting a services or products at a worth that’s not worthwhile however the one goal right here is to draw new clients.  These new clients will finally additionally purchase one thing to go together with this product or different merchandise which can greater than compensate for the loss on this product class.  

E.g. Razor and Blades : Promote Razor at beneath price or price worth in order that buyer will get attracted with the worth and buys the Razor, however the razor is ineffective with out the blade (that is the place the corporate will earn a living).

One other instance could be gaming consoles, the place the consoles are bought at beneath revenue or at price in order that with each new sport being launched the console house owners would finally have to purchase the sport from the console producer (model) itself leading to incremental and recurring income for the model.

In Platform companies, this loss chief idea may be very a lot evident e.g. funds enterprise, the place the platforms solely goal is to draw clients and retailers to the fee platform the place the upsell (lending) will make many of the cash for the platform.

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