[0xbadcafebee]

On the contrary, a successful business will eat some costs in order to generate more profit. That's the definition of a loss leader.

When Publix sells a rotisserie chicken for $8, they're taking a loss on every one. If people only came to Publix for the chicken, they'd go bankrupt in a month. Hence they aren't passing on the cost. They hope people will buy other items too, which have higher margins, and make up the difference of lost profit - and they are right.

[sokoloff]

When Publix lets me see inside the market because they have the lights on, lets me not shiver because they have the heat on, or lets me use a shopping basket without charging for it, they're also "eat[ing] some costs in order to generate more profit".

Surely GP's text should be ever-so-slightly charitably read to mean overall/aggregated costs, not that each and every individual cost is passed on.

[lotsofpulp]

In the context of the comment I replied to, I meant all businesses pass on all costs in aggregate.

But the commenter I replied to then clarified they meant the business does not evenly spread the transportation costs equally amongst all customers nationwide.

[0xbadcafebee]

Right, they're all part of the same concept. The business doesn't necessarily pass costs on to a customer. They may be intending to make a profit, and thus may recoup costs in other ways than what the consumer is directly paying for. "Eventually making enough money to keep the lights on" is a different concept than "recouping all costs".

Other examples:

- "Free" online services aren't paid for by users, so the business eats the cost of the service. But they hope to recoup the cost from advertisers or from selling data. The users are customers, and the advertisers are customers, but only some of the customers are subsidizing the business, hence the cost is only passed to some of the customers.

- Another example of the above: 40% of the profit for Neiman Marcus comes from 2% of the customers. The brunt of the cost of the business is not getting passed on to 98% of customers.

- Tech darlings (Uber, etc) lose money hand over fist for years, sometimes decades, never recouping their cost.

- Some businesses/industries are heavily subsidized. The customer sees a low price, and the business's costs are actually "passed on" to a tax-paying polity, who are often not the customer.

- A business may write down costs (due to a loss), paying the difference out of pocket, without passing on this write-down to customers.

So a business can spend more money than it makes, it can spend someone else's money [not needing to recoup said cost], it can literally just pay a cost out of pocket without any expectation of return, and it can spend a lot of money to make very little in profit.