>[!abstract] >The loss leader strategy is a pricing tactic in which a product is sold at a loss (below cost or with minimal margin) to attract customers, with the expectation that they will make additional purchases of higher-margin goods or services. Common in retail, hospitality, and digital markets, this approach leverages the initial draw of a bargain to stimulate broader spending or brand loyalty. While effective in driving traffic and market share, it carries risks of eroding profitability, training customers to expect discounts, or provoking price wars if competitors retaliate. Its success depends on careful cross-selling and ensuring ancillary revenues outweigh the initial loss. >[!related] >- **North** (upstream): [[Pricing strategies]] >- **West** (similar): [[Penetration pricing]] (initial low price to gain market share) >- **East** (different): [[Premium pricing]] (selling at a high margin to signal quality or exclusivity) >- **South** (downstream): [[Cross-selling]] (capturing profits on complementary or higher-margin items once customers are in the door)