Stay-out pricing
Also called: stay-out strategy
What is stay-out pricing?
With stay-out pricing, the price for a product or service is deliberately kept so low that the market is not interesting to potential newcomers. The low prices effectively seal off the market to outsiders.
How does stay-out pricing work?
Since profit margins are kept minimal, this strategy is only lucrative in the long run in a market dominated by one or two major players. The lack of margin is compensated by the returns from higher volumes or by the profit on the sale of related products.
Stay-out pricing vs. penetration politics
This strategy is akin to put-out pricing, where prices are lowered to eliminate competition. The opposite of stay-out pricing is penetration pricing; here, a new entrant tries to capture part of the market with low prices in a short period of time.
