Penetration pricing

Penetration pricing is when a company wants to sell a new product and wants to get a lot of people to buy it quickly. They make the price of the product very low, so it's a good deal for people who might not want to spend a lot of money.

Imagine going to a store and seeing two different toys. One toy costs 10 dollars and the other toy costs 5 dollars. Even though you might like the toy that costs 10 dollars more, you might choose to buy the toy that costs 5 dollars because it's cheaper and still looks like fun.

This is what companies do with penetration pricing. They make the price really low at first so people will be more likely to buy the product. Sometimes, they sell the product at a loss (meaning they actually lose money by making the product) because they think they can make more money later on when more people want to buy the product at the regular price.

The idea behind penetration pricing is that once people try the product and see how good it is, they will want to buy it again, even if the price goes up. So, the company hopes that by offering the product at a low price, they can attract a lot of people to try it and eventually make more money in the long run.