I never understood why businesses do things like this. In many industries there is often a class of customer that it is proclaimed "we don't make any money on them" and as such they provide a low quality of service. If you actually lose money why don't you raise prices on them? Why are you worried about losing a customer you claim not to want in the first place?
Doing low quality work is a great way to lower both your reputation and job satisfaction. And you better be 100% certain of each customer's lifetime value, otherwise you'll have a problem.
This resonates with me. When i was younger I used to get ignored a lot at certain kinds of store. Now I have more money I still avoid them on principal.
Anyway, if you want to serve low-margin customers, optimize your business against them, and be happy with those low margins, because you won't get any of the high margin ones.
Also, publicize your low-margin focus (tell up-front that you won't do non-billable services, and what service comes with what item), otherwise you'll be full of annoyed customers wanting reparations after a bad interaction.
The concept of selling part in a loss instead of raising price and then treating customer badly so that he does not buy that is still mystery.
Btw, the shop was flooded by customers looking for new bikes at the end of the lockdown here (Italy.) That lasted for a month with long lines at every bike shop until the warehouses run out of parts. I saw an increase of people using bicycles at least until temperature got past 30 C (86 F.)
If you sell me a $200 basic steel bike, you might be selling near or at cost. But if you've earned my trust and comfort as a customer, I'll be back to buy my spare tyres, oil, replacement parts, and eventually the higher margin $800, $1500, $6000, and $20,000 bikes.