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Was the reduction in parking meter fees a “loss leader?”

Mar 21, 2017 Letters

Dear Editor,
From a business point of view, the steep reduction of the parking meter fees that was announced by the Mayor and City Council can fall into either of two categories, namely a discount or a loss leader. Discounts are used to attract customers to purchase goods and services over a period of time. In the parking meter scenario we can classify it as the purchase of a service by the persons desirous of utilizing the parking facilities. Discounts are a reduction on the selling price of the service but it does not result in a financial loss. In other words, prices do not fall below the cost of the service and profits are realised.
If the M&CC and SCS are making a profit with the reduction from five hundred dollars to one hundred dollars it makes this one of the best deals on the face of the planet. I cannot think of any investment in today’s competitive environment where a discount of five times the standard price still allows for profits.
On the other hand, businesses use what is called a loss leader. It is a reduced price, below cost that will attract customers. Businesses absorb losses on the service to drive traffic to a location. However, loss leaders cannot be sustained for an extended period of time, so the price is usually increased within a short time frame. Editor, was the reduction of parking meter fees a discount or a loss leader?
M. Craig

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