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Concept
Freebie marketing
Résumé
The razor and blades business model is a business model in which one item is sold at a low price (or given away for free) in order to increase sales of a complementary good, such as consumable supplies. It is different from loss leader marketing and free sample marketing, which do not depend on complementary products or services. Common examples of the razor and blades model include inkjet printers whose ink cartridges are significantly marked up in price, coffee machines that use single-use coffee pods, electric toothbrushes, and video game consoles which require additional purchases to obtain accessories and software not included in the original package.
Although the concept and the catchphrase "Give 'em the razor; sell 'em the blades" are widely credited to King Camp Gillette, the inventor of the safety razor, Gillette, did not in fact follow this model.
King Camp Gillette
The legend about Gillette is that he realized that a disposable razor blade would not only be convenient, but also generate a continuous revenue stream. To foster that stream, he sold razors at an artificially low price to create the market for the blades. But Gillette razors were expensive when they were first introduced and the price only went down after his patents expired in the 1920s: it was his competitors who invented the razors-and-blades model.
This model has been used in several businesses for many years.
With a monopoly in the American domestic market, Standard Oil and its owner, John D. Rockefeller, looked to China to expand their business. Representatives of Standard Oil gave away eight million kerosene lamps for free or sold them at greatly reduced prices to increase the demand for kerosene.
Among American businessmen, this gave rise to the catchphrase "Oil for the lamps of China." Alice Tisdale Hobart's novel Oil for the Lamps of China was a fictional treatment of the phenomenon.
In its decades as the dominant photographic film producer in the United States, Kodak sold its cameras at low prices and enjoyed large profit margins on the consumables of the trade, such as film, printing supplies, and processing chemicals.
Source officielle
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