Loss Leader
A loss leader in B2B sales is a product or service offered at a price below its market cost to attract new customers and stimulate sales of other, more profitable products or services.
It's a strategic pricing tactic aimed at increasing overall revenue and market share, even if it means sacrificing profit on a particular product or service.
How Loss Leader Works in B2B
Attracting new customers: Offering a product at a loss can entice potential customers to try the company's offerings.
Cross-selling and upselling: Once customers are engaged, the business can focus on selling higher-margin products or services.
Building brand awareness: A loss leader can help increase brand visibility and recognition.
Example of Loss Leader in B2B
A software company might offer a basic version of its product at a discounted price to attract new customers. While the initial sale might be at a loss, the company aims to convert these customers into paying customers for premium features or additional modules in the future.
Note: While loss leaders are common in retail, their application in B2B is less frequent due to the nature of complex sales cycles and higher-value products. However, it can be effective in specific B2B markets or for introducing new products.
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