Loss Leaders: Why Shops Sell Some Items Below Cost
Cheap milk, bread, or games consoles can bring customers in to buy more profitable items.
By Iris Penhaligon | Oct 2, 2026 | 5 min
A loss leader is a product sold at or below cost to attract customers. The retailer expects to recoup the loss on other purchases.
It is one of the oldest tricks in retail.
I Common examples
- — Supermarket staples like milk, bread, or bananas
- — Games consoles sold at low margins, with profits from games and subscriptions
- — Printers sold cheaply, with profits from ink
- — Restaurant drink deals with full-price food
II Why it works
Shoppers notice the prices of a few common items and use them to judge how cheap a store is overall. Once in the store, most people buy several other items too.
IV Rules and limits
In some countries, selling below cost is restricted to protect smaller competitors. Competition authorities may also investigate if a dominant firm uses below-cost pricing to drive rivals out of the market — known as predatory pricing.
This is general educational information about economics, not financial, investment, or tax advice. Consult a qualified, licensed professional before making financial decisions.
Further reading
- 1. Why Prices End in .99
- 2. Why Companies Bundle Products Together
- 3. Surge Pricing: How Ride-Hailing Sets Prices in Real Time