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Business Model

Razor-and-Blades Model

Also Known As Freebie Marketing
Pricing and Revenue-Structure Models

The razor-and-blades model is a pricing strategy in which a durable base product is sold cheaply, or even given away, to lock customers into repeat purchases of a proprietary complementary consumable at a higher margin. Classic modern examples include inkjet printers and their cartridges and single-serve coffee machines and their pods. The model is popularly, but inaccurately, attributed to King Camp Gillette and the safety razor: Gillette's own razors were expensive when first introduced, and it was his competitors who invented the razor-and-blades pricing pattern after his patents expired. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/

Facts
Partially Attested
Origin Year
1920 1
Often miscredited to King Camp Gillette's safety razor, patented 1904; Gillette's own pricing did not in fact follow this pattern, and it was competitors who began the razor-and-blades pricing pattern after his patents expired in the 1920s.
Core Mechanism
The base product is priced at or below cost to drive adoption, while the ongoing proprietary complementary good is priced with a high margin to capture profit over the lifetime of the customer relationship. 1
Connections

Associated With

King Camp Gillette, Founders, Executives and Management Thinkers

Gillette invented and commercialized the disposable-blade razor, the textbook originating case of the razor-and-blades pricing model.

Source Wikipedia, King Camp Gillette
The Gillette Company, Companies and Brands

The razor-and-blades pricing pattern is popularly, though inaccurately, attributed to Gillette and its safety razor; Gillette's own early razors were priced at a premium, and competitors invented the loss-leader-razor, profit-margin-blade pattern only after his patents expired around 1921.

Source Wikipedia, The Gillette Company

Disputed

King Camp Gillette, Founders, Executives and Management Thinkers

Why this is corrected. Popular attribution credits Gillette with deliberately selling razors cheap to sell blades. The documented record disputes this: Gillette razors were priced high when introduced, and it was competitors, after his patents expired in the 1920s, who actually applied the razor-and-blades pattern now named for him.

Source Wikipedia, Razor and Blades Business Model

Question On

What year, and by whom, did the razor-and-blades pricing model actually emerge?, Open Questions
Sources
1. Wikipedia, Razor and Blades Business Model
Wikipedia
  • History section
    Gillette razors were expensive when they were first introduced, and the price only went down after his patents expired in the 1920s: it was his competitors who invented the razors-and-blades model.
  • Lead section
    The razor-and-blades business model is a business model in which one article is sold at a low price or even given away in order to increase sales of a complementary good, such as consumable supplies.
  • Developed By: King Camp Gillette
View the Source
Wikipedia, The Gillette Company
WikipediaAssociated With: The Gillette Company, lead sectionView the Source
Wikipedia, King Camp Gillette
WikipediaAssociated With: King Camp GilletteView the Source
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