The Razor And Blades Business Model

Before starting with anything else you need a basic introduction of the model itself. This concept is a tactic for the pricing of a product that is going to be sold at a comparatively lower price and also with a loss so that any other consumable products that have been paired with the previous one is capable for generating the profits.

This is also known as the razor and blades business model. The generation of the strategy for marketing and pricing is going to be designed in such a manner that it is capable for making reliable and also sustainable income just with the process of a customer being locked into a platform or any similar tool for a more extended period. 

Bait and Hook

With a straightforward example, you can quickly think of yourself that you are going to the super shop and purchasing some reason for yourself. You probably have also purchased their matching blades that are going to be used as a replacement after the original edge has used. The main thing here is for you to understand that the handles of the races are only 10% of the entire structure.

So, in this case, the handles are going to be free on a practical basis, but the blades are quite expensive as well. One of the pioneers of manufacturer of razor blades known as the company of Gillette is the first one who invented the safety razor technique and also disposable razor blades. Gillette was the first company who introduced the concept of razor and blade business model.

The reason is that suppose the racer handle is worth $1 in that case the blood is going to be worth $7 Right here you are going to purchase the entire package with only $5. When you are actually buying the whole product then after a couple of weeks, you are going to need a replacement for your existing blades. But the main thing is that the package of replacement blade is going to come with $8 or $9 of price. Right here you can see that the actual was only $7 for the blade, but the company is being able to pull even more profit than the actual price of putting the price slightly higher of the practical level. The only theatre towards the type of model for business is the potential competition that has the capability for surpassing one another. In this case, they are following the basic strategy of preventing any other game for being used as a third party. Suppose if you have purchased a printer from Nikon or Canon then it is very much possible that you are not going to be able to use cheaper cartridges into the printer that is not manufactured from this company.

Best Examples

When you are thinking of a Playstation gaming console then you already know that you are not going to be able to purchase any other gaming disc and install it over the console. You are going to require that specific compatible set of disks which can be installed on to the platform and this is one of the best examples of razor and blades business model. You can see that the console is going to be purchased by one customer maybe once in the entire lifetime. But that single customer after purchasing that council is going to buy a lot of disk from the same company which is going to generate a significant amount of revenue.

Here are some more examples for you to understand better of this concept. You can also see how are the most famous companies that you have been engaging with regularly are using the same idea for generating a large amount of profit.

• Amazon Kindle: the Amazon Kindle devices are quite affordable for almost anyone who has a passion for reading a lot of books. But the equipment is also durable so it is more likely that one person might not purchase more than two devices in his entire lifetime. In this case, the profit margin of the company is going to be strictly limited. But what is done here actually is that Amazon Kindle devices are only going to be supported with the specific Ebooks that have been purchased from Amazon Kindle store directly. You can see that Amazon Kindle is making a large amount of potential area for its profit-making business.
• Mobile phones: there are several popular smartphone manufacturing companies such as the Apple or Samsung who have a specific set of gadgets provided along with the device which can be only supported by the device if it is purchased from the authorised manufacturer only. If you can buy an iPhone, then you already know that you are going to be downloading all of the contents are all of the songs all videos only from the Apple store, which is going to create a lot of potential sector for gaining their profit over their business.
• Printers: it is already said that the specific company of printer manufacturer gives a particular set of cartridges that can be only supported by the printer and no other.

When Should You Apply Razor and Blades?

Before just getting on to the implementation of this model of your business in the hope that you are going to be able to make a lot of profits, you need to think about your entire business structure that whether or not It is capable for supporting this model. 

If you have the potential to create such a business market for your own company that is going to be competent for providing the proper substitute products with the main product that you are setting as your razor model, feel free to try to implement this plan over your business. You always have to remember that without the proper assurance that you are going to be capable for providing the appropriate blade for each of the razors, you should not choose this model for implementation over your business. That is only going to make things worse for you.