Why Small Businesses Need To Beware of Loss Leader Pricing Tactics (& How To Do It The Right Way)

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The loss leader market method is time-honored and ubiquitous, and as soon as you understand what it looks like, you will see evidence of loss leaders everywhere. It’s real: if you have the resources to take a loss on a product that your rival may not be able to rate at a loss, you have a benefit over the competitors. A loss leader that operates without a connection to your other items could result in a loss in profit.

The loss leader market method is common and time-honored, and when you understand what it looks like, you will see proof of loss leaders everywhere. If your loss leader technique involves bringing customers back for different and subsequent items (think video games with video gaming devices or more books in a series), this is a fantastic opportunity to develop brand loyalty. It’s true: if you have the resources to take a loss on an item that your rival may not be able to rate at a loss, you have an advantage over the competition. The guidelines were made to protect small businesses from bigger organisations and box stores that benefit from loss leading and can pay for to take a loss. A loss leader that operates without a connection to your other products could result in a loss in profit.

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