Stay-out pricing
Also called: stay-out strategy
What is stay-out pricing?
In stay-out pricing, the price for a product or service is deliberately kept so low that the market is not interesting to potential entrants. Low prices effectively seal off the market to outsiders.
How does stay-out pricing work?
Since profit margins are kept minimal, this strategy is lucrative in the long run only in a market dominated by one or two major players. The lack of margin is compensated for by the returns from higher volumes or by profits on sales 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 a share of the market with low prices in a short period of time.
