What is leader pricing commonly referred to as?

Leader pricing is commonly referred to as loss-leader pricing because this strategy involves setting the price of a product very low, often at a loss, to attract customers to a store or a brand. The goal is to encourage customers to purchase additional items once they are in the store or engaging with the brand, which can help to increase overall sales volume and profitability.

The term "loss-leader" highlights the idea that while the price of the key product might lead to a loss, the hope is that the increased foot traffic or customer engagement will compensate for that loss through the purchase of other goods or services at regular prices. Retailers often use this strategy for essential items or popular products that they know will draw customers in. This approach can effectively boost total sales and market share in a competitive environment.

In contrast, value pricing emphasizes providing a product at a perceived good value, while premium pricing focuses on setting higher prices to signal quality or exclusivity. Dynamic pricing refers to adjusting prices based on demand and supply conditions. These concepts differ fundamentally from the loss-leader approach, reinforcing why identifying leader pricing specifically as loss-leader pricing is indeed correct.