The Razor-and-Blade model is based on the principle of offering a main product cheaply or below cost and earning the margin through associated consumables. The low entry price lowers the purchase barrier and binds the customer to a system in which follow-up products are repeatedly needed. The model works because customers frequently underestimate the total cost over the usage period.
The model is named after Gillette, even though the historical attribution is disputed. Gillette sold razors cheaply and earned from the proprietary blades. Nespresso sells machines at moderate prices and generates the main margin through capsules. HP earns less from printers than from ink cartridges. The pattern also applies in the digital space: gaming consoles are often sold near manufacturing cost, with the margin coming from game sales and online services.
The prerequisite for this model is a lock-in mechanism: the consumables must be proprietary so that customers cannot switch to cheaper alternatives. Yet this very lock-in can also become a risk when competitors offer compatible alternatives or regulation intervenes.
Apply methods, don't just know them. View trainings and workshops
