What defines the strategy of loss leader pricing?

Loss leader pricing is a strategic approach where a business offers a product at a price lower than its cost to attract customers. This practice aims to draw in consumers who might then purchase additional items, ideally leading to profitable sales along with the intended loss leader.

By providing an item at a reduced price, businesses can increase foot traffic or online visits, encourage bulk purchases, or promote other higher-margin products. This not only brings customers into the store or onto the website but can also create a hook for building brand loyalty, as customers might return for the perceived savings and overall shopping experience.

In contrast, selling products at a high profit margin, charging different prices based on demand, and setting premium prices for added features describe other pricing strategies that do not involve intentionally lowering prices to drive sales.