Loss Leader

Definition

In an accounting firm context, a loss leader is an engagement priced below its true cost, either intentionally to attract a client relationship or accidentally due to scope expansion and poor project monitoring. While sometimes used strategically to win new clients, unintentional loss leaders erode firm profitability and are difficult to identify without real-time engagement cost tracking. Identifying and eliminating loss leaders is a core benefit of moving to value-based or flat-fee pricing structures.