King Camp Gillette is widely credited for innovating the razor-blade model, in which he would give drastically reduced razors in order to sell the highly profitable blades. Other businesses like Microsoft and Sony have recently adopted this in giving away their gaming consoles at a loss in order to gain money from loyal customers in the form of future online subscriptions.
Small business owners should be forced to think about the razor-blade model, and should be asking themselves how can they create new services or offer complimenting products that improve their current business model?
Do free consultations bring in more customers?
Does giving tonic away for free with the sale of gin – sell more gin?
Does creating a story behind artisan jewellery, and giving it away for free increase sales?
Take a good look at Gillette and ask yourself how the razor-blade model can help you.