Trade · 6 pages · 12 min

How a loss leader is priced

A loss leader is priced to bring shoppers in, with the margin expected on the rest of the basket.

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From the opening

A loss leader is an item priced at or below the retailer's cost so that shoppers make the trip. The price is set for the visit, not for a profit on that item, and the retailer expects the rest of the basket to carry the margin the leader gave away. The opening covers the staple is priced as bait, the basket is meant to pay, and caps limit the giveaway.

The rest of the brief — the later sections and the reading notes — opens after Stripe confirms payment.

Inside

The staple is priced as bait
The basket is meant to pay
Caps limit the giveaway
A one-item shop cannot recover
Where the idea stops applying
A distinction worth keeping

Sources

Loss leader retail pricing
Basket margin on a traffic item

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How a loss leader is priced

From the opening

Inside

Sources

Also on the desk