Razor and Blades
How the razor-and-blades model — selling a cheap product and making money on consumables — became one of the most copied business strategies in history.
In nineteen oh one, King Gillette revealed a radical strategy. Sell razors very cheaply, almost at cost. But blades,used every few weeks,would carry enormous margins. Repeat purchases of cheap blades generated sustainable long-term profit. The strategy seemed backwards. Give away hardware profit to capture consumable profits. The math was brilliant. A customer bought one razor, then bought blades thirty times. Lifetime value came from refills, not the razor. Blade margins ran ninety percent while razor margins disappeared. Over a century later, the model endured. Keurig sells coffee makers then profits from proprietary pods.
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