Product Churning

Product Churning is the flooding of a market with new products in the hope that one of them will become successful. It is sometimes practiced by maintenance service providers. It involves selling a basic product at a loss or low profit margin, but receiving very high profit margins on associated products that are necessary for the basic product’s continued usage. It has been claimed that dollar cost averaging is a form of product churn under certain conditions. It also involves many transactions, creating brokerage commissions for the brokerage firm.