One of the most well-known and effective is the “razor and blade” profit model. This is a strategy in which the main product is sold at a low price, and high income is generat! by selling consumables or additional services.
The Essence of the “Razor and Blade” Business Model
The razor and blade business model is bas! on the principle of selling phone number library the main product at a low price or even at a loss. The profit in this model comes from selling consumables, spare parts or additional services that are necessary to use the main product.
Thus, the main goal of this model is to attract customers with a low price for the initial product and then make a profit from the ongoing sales of consumables.
The model gets its name from a classic example: selling a razor at a low mail user agent (mua) vs e-mail server price and then making a profit by selling replacement blades.
Examples of the Razor and Blade Business Model
Printers and cartridges, game consoles and games.
Coffee machines and capsules, razors and blades.
Cars and parts, lawn mowers and blades.
Inhalation devices and What is the Razor cartridges, glucometers and test strips.
Streaming services and content subscriptions.
Advantages of the Razor and Blade Business Model
High profitability. Selling consumables and additional services singapore lead often brings higher profits than selling the main product.
What is margin, how to calculate it. How margin differs from profit
Constant income. The constant ne! for consumables provides a stable source of income.
Increas! customer loyalty: Customers who have already invest! in the core product are more likely to purchase consumables from the same supplier.
Why Customer Loyalty Matters for Business
Creating barriers to entry: Selling consumables at higher prices can create barriers to entry for competitors trying to sell compatible products.
Disadvantages of the Razor and Blade Business Model
Negative customer reactions when consumables or additional services are sold at inflat! prices.