University of Georgia: John Burnett's "Core Concepts of Marketing, Chapter 9: Pricing the Product"

Read this chapter. Pricing is a difficult issue because most products will sell at some volume at just about any price level. Certain customers are willing to pay almost any price for a specific product, but how many of those customers exist? Marketers could consider a value priced model, but this may make the product's price so low that there is no way to make a profit on it. One common pricing strategy is known as "the loss leader,” which involves selling one product below the cost to manufacture it to get it in the hands of customers. They make up for this loss later with complementary goods. This is commonly seen in video game consule sales. Consule system manufacturers like Sony and Nintendo will price the system below the cost to manufacture it. As consumers adopt the systems due to the attractive price point, the manufacturer makes up for the initial loss on the system with sales of proprietary accessories and video games.