Loss leader

A loss leader is a product sold at a very low price, sometimes below cost, to attract customers. The seller expects additional purchases to make the overall transaction worthwhile, so its success depends on the wider basket rather than that item's margin.

The strategy depends on customers buying other goods that generate enough contribution to cover the low-priced item and the costs of serving the sale. If shoppers buy only the promoted product, the expected wider benefit may not materialise. Availability and promotional limits also matter because an attractive offer can generate demand that stock cannot support.

For example, a shop may price a familiar staple very cheaply to encourage a larger grocery basket. Contribution margin should be assessed across the resulting purchases. Bundle pricing is a different approach: it offers a stated group of products together, rather than relying on customers to add unadvertised items.