09-24-2020, 07:45 PM
#1
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The razors and blades model is a business model* in which one item is sold at a low price in order to increase sales of a complementary good. Common variations today is printers-and-ink, consoles-and-games, and razors-and-cartridges.

There is a common myth that the business model originated with King Gillette. This myth is false – Gillette priced his early razors at 5 US dollars. This was equivalent to about approximately 145 US dollar in 2020… five times more expensive than the offerings from companies like Gem, EverReady and Christy. All three sold their razors for one dollar, while companies like CURBO even gave their razors away for free.

I am not – by far – the first one to notice this. Randal C. Picker of the University of Chicago Law School wrote a paper on the myth in 2010.** The paper is an interesting take on disruptive technologies, and how patents influence business practices. Gillette didn’t start moving towards the razor and blade model until after the patent on the Gillette Old expired. One could argue Gillette wasn’t fully committed to the model until they introduced cartridges.

As described in the paper, EverReady and other low priced razors came much closer to the razor and blade model. Gillette seems to have implemented a monopolistic business model^ – costly razors and a single source of blades. This was not completely successful, since they did not have a monopoly on safety razors in general.To quote the paper:


Quote:Gillette’s business model—both its actual business model and its supposed razors-and-blades model—faced real competition and strong limits. The Ever-Ready and Gem Junior razor handles were implicitly priced at a very low price. Straight-blade shavers could try the new multi-blade approach with a minimal upfront investment and Gillette shavers could switch easily if Gillette blade prices were too high.

Keywords is minimal upfront investment. Today someone making the shift from cartridges to traditional wetshaving is more likely to buy a 30 dollar safety razor over a 150 dollar one. It must be assumed that the same held true 100-120 years ago. If the initial investment is lower, the barrier to entry is lower. This probably explains why so many inexpensive razors – Diamond Edge, Christy and even CURBO – stayed in production and use for such a long time

I strongly suggest reading the paper – or if time is of the essence, at least the article the author penned for the Harvard Business Review.

Footnotes:
*) An in depth article can be found on Wikipedia.
**) You can read the abstract here, and also download the full thirty six page paper.
^) Once again, there is an article on Wikipedia.

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 09-25-2020, 06:27 PM
#2
  • chazt
  • Shimmer of Techs
  • Queens, NY
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Thanks for sharing this, Hans. It was an interesting read. The author should try to include more detailed sales data. It would have fit nicely. Nonetheless, it was another good find. I must search the host’s database for other interesting articles.

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 12-17-2020, 05:55 PM
#3
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I respectfully disagree.
Gillette had $1.00 models on the shelf next to 3, 5, 7 and 10 dollar models.
They did not care what model you bought, they wanted you buying blades...for life.
Hence the "Goodwill" model where they introduced a proprietary new blade (diamond cutouts), given away for the cost of a pack of blades.
The Goodwill came with a slip of paper saying "only genuine Gillette blades will fit your new razor"....

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 12-18-2020, 04:28 AM
#4
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(12-17-2020, 05:55 PM)Old School TSD Wrote: Gillette had $1.00 models on the shelf next to 3, 5, 7 and 10 dollar models.

As far as I can ascertain, Gillette did not offer a 1$ model until after others - i.e.: American Safety Razor Corp, Christy, and others - had proven that it was a viable model, as well as his original patent (which covered the blade) was about to expire.  Before that, the cheapest models I've been able to find advertised was offered for 5$.

The Goodwill - which is more or less a rebranded Probak - is a much later razor, and one which King Gillette didn't have all that much to do with.

The point made y Randal C. Picker - which I also noticed some years back - still stand. Gillette did NOT originate the Razors and Blades business model.

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