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Comment by sak84 | Hacker News Reader

I work at Parse.ly, who's office is literally right next door to these pizza shops. Last week, when they changed their prices, I asked the owner of the Indian shop how low he'd go, and he said two very interesting things:

1. He hates two bros and wants to go low enough to make them leave the area.

2. He didn't make money from pizza even when it was priced at one dollar. The pizza barely pays for the cost of the labor to make it. So why do it at all? Because it acts as lead gen for his Indian food which has a much higher margin. He has essentially a freemium model that works to beat his competitor!

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An acquaintance of mine who once worked at a mexican restaurant told me that there was hardly any profit made on the food -- the profit came from the drinks the restaurant sold along with it. The taco as a loss leader ;-)

Same with inkjet printers nowadays.They almost cost nothing ($35), but when you run out of ink, you realize where they get their money from.

interesting logic, but honestly just doesnt seem very prudent [not saying that you are defending them]. doing something out of emotion, while old school isnt a reason on its own. and for the freemium model, it just doesnt make a ton of sense. if somebody is going in for cheap pizza, are they really going to pick up some indian food in the same order? if they want indian food, are they going to go to a place they consider a cheap pizza shop, or are they going to pick an "actual" indian restaurant?

the whole article just sorta reminded me of old school business practices that arent well thought out, are based on emotion and not metrics and dont seem to work out in the end except in rare cases of luck.

I'd give the guy the benefit of the doubt. He's been running this joint for a while now, and I bet he actually is making decisions based on metrics he has. Though I agree that conversions from pizza to indian food is probably pretty low, it may just be that the margins are high enough that it warrants selling the pizza. I don't think he would do the pizza business unless it had promise in one way or another.

You are right. The guy is there everyday. If he's like a typical small business owner (I've dealt with thousands) he knows exactly what he is doing and has it all in his head.

Thanks for sharing. That actually adds a lot of context to the story.

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