For example, Porter Roundhouse Steaks at US$2.50 per pound, with the expectation that the sales volume for related items (beer, potatoes, corn, etc) will offset the loss caused by selling the steak at below cost.
You can’t call eBay sales a loss leader, because there are no products sales from which the lost revenue can be offset.
There are only three instances when an experienced manager is willing to use a product as a loss-leader:
* The item is overstocked, and inventory needs to be reduced as fast as possible;
* The item is being discontinued, and they want to reduce inventory as fast as possible;
* There is an assurance that the sales of other products will offset the lost revenue that the loss-leader generates;