Predatory Pricing

What this topic is

Predatory pricing is deliberately selling below cost to bleed competitors until they exit or sell, then raising prices once you dominate. It needs deep pockets to outlast rivals and a barrier that keeps new ones from entering once prices rise.

Why it matters

It's how a well-funded giant can turn "great low prices" into a weapon that eliminates competition — and it's notoriously hard to prove illegal, because low prices look like healthy competition until the rivals are gone.

Who should learn it

Anyone competing against a much larger, deep-pocketed rival — and anyone trying to tell aggressive-but-fair competition from a deliberate campaign to kill it.

What you will understand

• See how below-cost pricing can be a weapon, not just a deal
• Understand the "bleed them out, then raise prices" logic
• Know why it needs deep pockets and a barrier to entry
• Respond when a giant prices below cost to force you out

Prerequisites

• Loss Leaders
• Critical Mass and the Tipping Point Where a Market Stops Being Contested

Common misconception

"Low prices are always good for customers." In the short run, yes — but predatory pricing uses temporary low prices to kill competition, after which prices can rise and choice shrinks. The cheap deal today can buy a more expensive, less competitive market tomorrow.