Selling at a loss occurs when the selling price of a product is lower than its production or purchase cost. If a distributor resells goods acquired from a supplier at a price lower than the purchase price, this is considered selling at a loss. Selling at a loss by a manufacturer can be legal, provided it does not fall under the category of excessively low-priced practices. This practice can be justified, particularly during the start-up phase of a business, when economies of scale related to production cannot yet be achieved due to low sales volumes. However, selling at a loss is strictly prohibited for retailers.