Razor and blades business model

The razor and blades business model works by selling a "master" product at a subsidised price, and making the profit on high margin "consumables" that are essential to the use of the master product. The master product may actually be sold at a loss, in order to "capture" the customer into using the consumable product.

In effect, this is the same as offering a high-interest loan to the customer to offset the price of the master product, which is to be paid off in installments as they use the consumables.

This business model can be dated to King C. Gilette, who invented the idea for the original example of razor handles and disposable razor blades. This business model continues to be used in the disposable razor blade business to this day.

Other examples include:

• computer printers and their ink cartridges
• games consoles and the games they play