Loss leader pricing

A supermarket prices eggs at €0.90 though they cost €1.20, a €0.30 loss per carton. If 500 shoppers buy the eggs for the promotion, the store loses 500 times €0.30, or €150. But those shoppers spend, on average, €4.00 more at a 25% margin, earning €1.00 each, or €500 across the week — a net gain of €500 minus €150, or €350.