This is a common tactic for all businesses. PC sales make for another good example, where a laptop for $500, will often cost the company $490-495 to bring in. Then that laptop will go on sale for $450.blippityblip wrote:I'll explain the concept, I work in a supermarket, quite often supermarkets will do an offer where they are selling a product cheaper than their buying it for, it's known as something along the lines as a lose leading promotion or something like that, the aim for that promotion isn't to make money, but to get more people in the shops, people that would otherwise shop in a competitor, for instance this week we are selling something for £5 a unit, that the company are buying in at £5.97 a unit, people will see this offer in the paper or on TVs and will come into the shop for that, most customers will then buy more things in that shop, so where they are losing money on one product their gaining more sales on others thus making more money, all the big supermarkets in the uk do, especially around big events like Christmas, Easter, Black Friday etc. This could well be what GW are doing, making very little on start collecting boxes to help increase the sales for the rest of the range, because let's be honest who hasn't been tempted to start a new army after seeing one of those?
Then you (the average consumer) buy a wireless mouse, carrying case, anti-virus software, maybe one or two other accessories that suit your needs. Or even more so, extended warranty. Each and every accessory product carries standard mark-ups of anywhere from 50% to well beyond 500%.
This is also why I always laughed at anyone who came in asking for a discount on buying a laptop with no attachments. You don't ask for a discount on something I'm already losing money on. Or even two. My favourite was "Could I get a discount if I bought two?" "You want a bulk discount, I can do so. Let's talk 15 or more."
"Loss leaders" is the correct term. It would not surprise me even slightly if GW is making little, to no, profit on "Start Collecting" bundles because they're a perfect example of a loss leader.