As a way to obtain new customers you can offer your product or services at a price that is less than your direct cost. Cell phone companies offer new phones for less than the actual cost of the phone in exchange for an extended contract. Razors are often sold at a loss based on the idea that the razor is useless without blades, which are then sold for a healthy margin.
Products and services offered at a steep discount or for less than their cost are called Loss Leaders. Loss Leaders can be an effective tool to attract new customers or get customers into your store.
How can you use a loss leader to attract new customers?
