Should every sale make money?
One shop loses money on purpose and does fine. Another loses money the same way and shuts down.
Strategy
Loss leader
Lose money on the bait.
A shop sells one thing at a loss on purpose. You come in for the cheap sugar and leave with ₹800 of everything else.
- Right when
- When the cheap item reliably pulls in a bigger basket. The loss works like an ad that pays for itself.
- For example
- A supermarket loses ₹10 on every bag of sugar. The shopper who came for it spends ₹800 on other things at a 20% margin. Lose ₹10, make ₹160.
- Wrong when
- When people buy only the bait and leave.
Money
Contribution margin
Every sale pays its own way.
What’s left from each sale after the costs that come with it. If it’s negative, selling more only means losing more.
- Right when
- When each sale stands alone: no bigger basket, no repeat visit, nothing else to sell. Then every sale has to pay its own way.
- For example
- A delivery app charges ₹30 for an order that costs ₹50 to deliver. At 10,000 orders a day, it loses ₹2 lakh a day, and growth only makes it worse.
- Wrong when
- When you judge one sale alone and miss what it brings in next.
What decides it
Does this sale bring another one with it?
Both ideas agree that the money has to come back somewhere. A loss leader is fine when you can point to exactly where it comes back. If you can’t, the sale should pay for itself.
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