Razor and blade Model is a business model in which the main body of the product is provided free of charge or at a low price, and accessories are continuously sold as consumables to maintain profits.
This name is derived from the adoption by Gillette, a razor maker that sells men’s shavings.
- Razor and blade Model case
- Advantages of Gillette model
- Disadvantages of the Gillette model
Razor and blade Model case
Examples and companies that utilize the Gillette model are as follows. (Main body → Accessories)
Razor and replacement blade
As mentioned above, this is the product from which the Gillette model was derived.
Nowadays, the sales style of this men’s razor is common, but in the past, products with a razor and a replacement blade were common, and consumers bought this one-piece razor every time it was time to change it. It was.
So, starting with a model where Gillette sells the handle and blade separately, if you buy the handle first and then just the blade, it will be cheaper than buying the integrated type. In addition, Gillette initially provided the main pattern for free , so we expanded its share at once.
Copier / Printer → Inkjet
Xerox was the first copier to bring this Gillette model to the industry.
We have made it possible to introduce the copier itself at a low price by leasing or renting it, and we are continuously earning profits from monthly usage fees and ink toner replacement according to the number of copies.
Water server → Water
We provide an expensive water server (main unit) for free to purchase individually, or rent it at a low price, and make a certain profit with the monthly water charge.
Typical water servers include “Aqua Clara”, “CreCla”, and “Suntory Tennensui Server”.
We also provide water in water boxes and packs, each of which can only be used on its own, and lock in consumers so that the water of other companies cannot be used.
Coffee maker → Coffee beans
A successful company using the Gillette model is the Spanish coffee maker Nestle Nespresso.
Nespresso offers an espresso machine that can extract fresh and full-fledged espresso at a low price of less than 10,000 yen, and has succeeded in the Gillette model using coffee beans (sealed capsules as consumables) that can only be used with that machine. I will.
Today, it provides coffee makers for home and corporate offices in more than 60 countries around the world, with sales of over $ 3 billion.
Game console → Software
Nintendo is a company that practices the Razor and blade Model with game consoles and software.
Nintendo is not cheap, but it produces main units such as 3DS and WiU, and its main source of revenue is game software, which is a consumable item, and it continues to generate profits. Nintendo has also adopted the “multi-side platform” business model, making it possible to use game software (consumables) produced by others on the main unit, so royalties from other companies are also available. It is a big source of revenue.
Mobile phone → Monthly cost
Mobile phones are also sold for free or at low prices at first, and are Gillette models that generate continuous profits from monthly communication charges and call charges.
Furthermore, once a mobile phone is contracted, it cannot be canceled for two years, or the obligation to pay the basic charge remains, and the main unit charge is also collected.
Recently, the high price setting of monthly communication charges (consumables) has become a problem.
Other Razor and blade Model
Other applications to the Gillet model include the water purifier “Trebino” (main body) and “replacement cartridge” (accessories) produced by Toray, and the sonic vibration toothbrush “Treason vibration toothbrush” produced by Panasonic. There are “Doltz” (main body), “replacement brush” (accessory), etc.
Tips for making the Gillette model successful
From the above cases, it can be seen that companies that have successfully adopted the Gillette model have two things in common.
- 1. To provide the main product for free or at a low price.
- 2. Make sure that the accessory product cannot be used with other companies’ products.
Advantages of Gillette model
Sales promotion by illusion
In the case of Gillette, if you sell only with a spare blade, it seems that you can buy it cheaper than the integrated type, but if you look at it over a long period of time, you can add more profit than selling it with the integrated type.
Depending on the product, it has already been proven that even if you offer the main product for free, you can continue to make a profit if you continue to sell the accessories.
Also, if you can only use your own accessories, you can keep buying your own accessories, enable customer retention , and continue sales. Will be further guaranteed.
Disadvantages of the Gillette model
Beware of brand image deterioration
For example, if the price of an inkjet is set high, the high inkjet will make consumers uncomfortable every time they buy a new one.
In addition, if you produce many types of main products and also make many accessories, the main products will not be compatible and there is a risk of confusion for consumers. If it is game software, the name of the main body is written in an easy-to-understand design for each package, but such measures are necessary.
If these are not dealt with well, it will lead to deterioration of the brand image of the company , and if the brand image deteriorates, the loyalty of the consumer company will also decrease, and it will become a new entrant with a low price. It’s very easy to switch and it will lead to a decline in business performance.