Posts Tagged ‘loss leader pricing’

General Mills Boosts Earnings by Raising Prices

Tuesday, June 18th, 2019

by Justin Grensing, Esq., MBA

 

Where to price products and services is a key part of any business’s marketing and finance strategies. Economic theory includes multiple strategies for pricing, depending on broader business goals. For example, a company looking to maximize profit will try to set its marginal revenue—the revenue received from one additional unit of sale—equal to marginal cost (the cost associated with one additional unit of sale). A company trying to maximize sales will focus on average costs and revenue. The point where they meet is the sales maximizing point.

Of course, these are economic theories, and how these strategies play out in the real world is anything but certain.

(more…)

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Leveraging Big Benefits From Loss Leader Pricing

Thursday, September 27th, 2018

content marketing, content management, content strategy, strategic marketing, marketing strategically, strategic communicationsby Justin Grensing, Esq., MBA

At first glance, it might seem like a ridiculous strategy to price a product below its cost. Wouldn’t you just be losing money? While this is true, many companies do just that, and they do lose money. On that specific offering. This is part of a strategy known as loss leader pricing. As defined by Inc., “loss leader pricing is an aggressive pricing strategy in which a store sells selected goods below cost in order to attract customers who will, according to the loss leader philosophy, make up for the losses on highlighted products with additional purchases of profitable goods.”

A great example of a loss leader is razors. (more…)

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