All paradoxesParadox

Should every sale make money?

One shop loses money on purpose and does fine. Another loses money the same way and shuts down.

2 ideas, 1 min

₹1
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.
Why do we pay more than we planned?
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.
Do You Make Money on Each One?

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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Namaste, I’m Manas.

I’m a CS grad. Samanar is where I learn business out loud, one idea at a time. I’m not an expert yet. Writing it down clearly is how I get there.

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