Customers purchase products from them knowing they probably paid too much. But, these companies have the prestigious reputation of high quality products and customer service. That's how they maintain market share. Companies who have big profit margins run the risk of competitors wanting-in on their markets. Sometimes, look-alike products appear out of nowhere to challenge even a small market share.
Customer relations can also be a problem with any high-priced strategy.
A company has to insure that the customer feels good about the purchase. The loss leader is the business pricing model to get the job done. The consequences of even a slight misjudgment in using this pricing strategy could be devastating to your business. Today, we see a more modern version of this pricing strategy being used by supermarkets and clothing store chains. The objective in these cases is to lure the customer into the store with a loss-leader.