Why isn't selling at a loss illegal?

[Droid party]

There something about it in european law, cornering markets and such. but not strictly pricing. Goods mostly come with a recommended retail price, but that's all it is a recommendation.

No one is selling at a loss. No matter how cheap it looks.

Silly naive boy. We sell at a loss all the time, simply because our competitors do and we look like we are price gouging if we don't at least match their price.It kinda sucks working commision at the reail level in this day and age. Oh well, that's why I got out.

[kgcarini]

says who?

It is a law in many countries.

Yep. The world makes sooo much more sense now. FREEEEEEEDOM!

[saturnfan]

Selling at a loss is called "baiting", which is one of the most uncomplicated economic principles that virtually all grocery and department stores take part in. Basically you sell one item at a loss in the hopes that the customer will engage in impulse buying. Grocery shoppers have an impulse buying rate of approximately 70% more then they originally intended to buy, so this tactic is very useful.

If we use the apple example, it makes a lot of sense to take a loss on the apples because the average shopper is going to make up for it. They see that the apples are being advertised for some ridiculously low price, like 15cents a pound, and decide to shop at that specific grocery store that week. The store makes up its profits in other items.

Now there are other reasons why a company would sell for a loss and a great example is the ps3 because Sony wants to push the blu-ray technology because they know they will make their profits on movies and video games which are never sold for a loss.

[zxqdms]

All the time, our customers ask us, "How do you make money doing this?" The answer is simple: Volume. That's what we do.

http://www.hulu.com/watch/4258/saturday ... nge-bank-1
http://www.hulu.com/watch/4253/saturday ... nge-bank-2

[Arbitern1]

Only if you are Jack Tramiel and you want to sue Sony for price dumping. Everybody totally believed that the Atari Jaguar is more powerful than a Sega Saturn

[Ivo]

You can't make a profit "selling at loss and making it up in volume" on items. You can do baiting (make a loss in one item and make it up on others), if that is what you meant by volume, but usually I see "making it up in volume" meaning that you make a small profit per item and get money because you sell many. In that case as long as the profit is negative, volume will only make things worse. There is even a comic strip making fun of that.

Also, selling at a loss is illegal under some circumstance in some countries. For example, Dumping:
http://en.wikipedia.org/wiki/Dumping_%2 ... _policy%29
International law typically prohibits state-backed dumping that would be hurtful to the national economy (imagine cheap Made in China products, due to the "slave wages" they get paid, subsidized by Chinese government and "dumped" to close down factories in your country - the sad thing is that this may be happening despite the laws).

Ivo.

[Jimmy Yakapucci]

Sony selling the PS3 at a loss is not really a fair comparison since nobody else sells the PS3. Wal*Mart selling the PS3 at a loss that Target can't compete with is another story. My wife used to ask me about the ads in the office supply store sale papers where you could get a whole bunch of stuff free after rebates. She asked me how the companies made any money.

JY

[jfrost]

Selling at loss is actually called "dumping": http://en.wikipedia.org/wiki/Dumping_%2 ... _policy%29

It's illegal in many countries, but it is also a pretty standard business practice. Anti-dumping laws are rarely enforced for that reason.

Edit: Just saw that Ivo beat me to it.

[MrPopo]

Selling at loss is actually called "dumping": http://en.wikipedia.org/wiki/Dumping_%2 ... _policy%29

It's illegal in many countries, but it is also a pretty standard business practice. Anti-dumping laws are rarely enforced for that reason.

Edit: Just saw that Ivo beat me to it.

Dumping involves selling at a loss, but not all selling at a loss is dumping (as is explained in the wikipedia article).

[noiseredux]

It worked out well for the Michael Scott Paper Company

hahaha so true. That was a multi-million dollarbuy-out.