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Razor And Blade 39#
The basic product is cheap or given away for free. The consumables that are needed to use or operate it, on the other hand, are expensive and sold at high margins. The initial product's price lowers customers’ barriers to purchase, while the subsequent recurring sales cross-finance it. Usually, these products are technologically bound to each other to further enhance this effect.
Apply this pattern to your own business and create your next innovative business model!
Examples: Iconic Cases
How they do it: Although the iPhone is not given away for free, Apple uses it as a platform to access to much more revenue opportunities through apps and other services beyond the pure hardware revenue.
Learn more about Apple iPhone/AppStore →
How they do it: The Sega Dreamcast was launched in 1999 for the price of $199, and video games for the Dreamcast were sold for $50-$70. With any customer owning on average multiple games, this resulted in recurring add-on revenues for Sega. These recurring sales of video games were cross-financing the cost of the hardware.
Learn more about Sega →
How they do it: Standard Oil Company is considered a pioneer of the Razor and Blade pattern. It sold cheap petroleum lamps alongside expensive oil to be used in the lamps as a consumable.
Learn more about Standard Oil Company →
How they do it: Gillette is the name giver of the razor and blade business model. Selling its razors at a loss / at cost, it creates a lock-in effect and can make a profit with consumables compatible with the razor, which has a significantly higher profit margin.
Learn more about Gillette →
How they do it: Although the iPod is not given away for free, Apple uses it as a platform to access to much more revenue opportunities through apps and other services beyond the pure hardware revenue.
Learn more about Apple iPod/iTunes →
Below, the top industries for the pattern "Razor And Blade" are displayed, in order to get insights into how this pattern is applied across different industries. We've collected data from 9 firms using this pattern.
Top Industries
Hardware
24% of firms using pattern
24% of firms using pattern
Consumer Goods
10% of firms using pattern
10% of firms using pattern
Information Technology
9% of firms using pattern
9% of firms using pattern
All Industries
Below, the pattern "Razor And Blade" is analyzed based on co-occurrence, in order to get insights into how this business model pattern is applied in combination with other patterns within the firms we studied.
Top Co-Occurrences
Leverage Customer Data
3 pattern co-occurrences
3 pattern co-occurrences
Revenue Sharing
3 pattern co-occurrences
3 pattern co-occurrences
Two-sided Market
3 pattern co-occurrences
3 pattern co-occurrences