The Myth Of Razors And Razor Blades
from the debunking-the-conventional-wisdom dept
The story of Gillette and the famous “razors and razor blades” business model is legendary at this point. The story goes that King Gillette revolutionized business by coming up with the strategy of selling razors cheaply, but then locking people in to expensive disposable blades, where the margin existed. This strategy has become so well-known that it’s mentioned all the time and seen in lots of other industries as well, especially the technology industry. It’s seen as the basis for console video games (consoles cheap, games expensive), printers (printers cheap, ink expensive), mobile phone service (phones cheap, service expensive), etc.
Of course, various business strategists who discuss the razor-razor blade business model suggest that there are some key rules to making this work: for example, many feel that there needs to be some level of lock-in, that prevents competitors from entering the high margin part of the market. That is, if someone else can just sell the high margin razorblades, then why would Gillette make the low margin (or negative margin) razors, since customers might just go elsewhere for the blades?
Well, it turns out that an awful lot of both the history and the theory turn out to be totally wrong when it comes to Gillette and the razor/razor blade market. Felix Salmon points us to Randy Picker’s latest paper, which explores the myths of the razors-and-blades story as it applies to Gillette — and the counterintuitive reality of what actually happened. I don’t think the real story is quite as surprising or confusing as Picker makes it out to be — other than the surprising fact that the common “story” we’ve all heard turns out to be wrong.
What Picker found, first of all, is that Gillette really didn’t use the cheap razors and expensive blades strategy at all in the early years. In fact, it went the opposite direction, and charged an extremely high price for the razors. While other razors went for closer to $1, Gillette charged $5 for its razor (with a set of 12 blades). As Picker notes, this represented about 1/3 of a week’s wages at the time, and made it a luxury item. While there were some convenience factors, other safety razors entered the market soon and charged a lot less than Gillette for both razors and blades… and Gillette kept its prices high.
And here’s where patents enter the story.
Gillette received patents in 1904 on both the razor and the blade. As Picker notes, conventional wisdom would suggest that this is the perfect point for Gillette to have used the famed razors-and-razor blades strategy, since it could use the patents to exclude competitors from offering compatible blades. But, it did not. The same “conventional wisdom” would then argue that once the patents expired, and others could offer compatible razors, the razors-and-blades strategy would not work. And yet, it was after the patents expired and when there were compatible blades on the market that Gillette finally went to this form of strategy…. and its sales and profits shot up.
Picker suggests that none of this makes sense. He says without exclusion via things like patents, a razors-and-blades strategy shouldn’t work, because there would be no lock-in on the platform (razors), and there would be competitors who would just offer the blades, undercutting Gillette, which would have to eat the costs on the cheap razors. Meanwhile, without the lock-in, users could just jump ship to a competitor at will, since the platform was so cheap.
I’d argue, however, that it actually makes perfect sense, the more you think about it. With patents, Gillette priced the razors (and, potentially, the blades) artificially high, creating a smaller, artificially limited market. This has long been our complaint with patents in general. Once the patents expired, and actual direct competition became more of an issue, then Gillette finally had to price to the market, capturing a much larger segment of the market, driving up revenue and profits because of it. As for why once the patents were no longer a serious issue, this strategy still worked, I think Picker underestimates both the value of brand loyalty and convenience, as well as mental transaction costs.
That is, even if others offer compatible blades for Gillette products, people are generally loyal to the overall platform brand if it hasn’t done them wrong. Not everyone will be, of course. There will always be some pure price shoppers who look for the best deal. But many people will remain generally loyal to Gillette, and with more customers coming in due to market pricing, the net benefit could be much greater. On top of that, people don’t want to have to worry about whether or not the blades will really fit or really work as well. They’re likely to feel more comfortable going with the brand name that is the same as the razor maker, knowing that it will work, and that there’s a level of quality involved. Choosing a different brand of blade involves risk and mental transaction costs that many users just won’t want to bother with.
The whole thing is quite fascinating in thinking about these kinds of business models. Printer companies, especially, might learn a thing or two, as they’ve now become quite aggressive in using patents to block competitors from offering compatible ink cartridges or ink refills. But, the example of Gillette suggests they could be better off not fighting it, but focusing on providing better quality that doesn’t annoy users quite so much.
Separately, I should also note that this is why I think that the classic (now, apparently mythological) Gillette razors-and-blades business model is not quite the same as the business models I suggest when it comes to infinite and scarce goods. That’s because the classic Gillette story (as opposed to what really happened, apparently) would require lock-in. But the give away the infinite and sell the scarce setup is to not worry about lock-in, since that tends to piss people off, but rather focus on providing value so that people are comfortable buying from you — which seems to be a bit closer to what actually happened with Gillette.
Filed Under: business models, patents, razorblades, razors
Comments on “The Myth Of Razors And Razor Blades”
I stopped buying Gillette about a year after they started the Mach 3 design. between the cost of the blades and the fact that they stated to lock up the blades behind theft deterring devices making it harder and harder to buy the damn things. I went to a straight razor design that uses cheaper replacement blades.
I did the same. The net result a better shave at substantially less cost.
i just flat stopped shaving
not so much because of any product, i just hate shaving is all
I’ve been thinking of making the same switch, though the Fusion is a pretty damn good razor.
Thanks for the well researched article – TechDirt is rapidly becoming one of my favorite tech sites.
While I wouldn’t refute the facts of your story I don’t believe you have debunked the cheap razor/expensive blade model nor proven it to be mythical. Quite the contrary, you have restated that that model was effective and profitable, really only speaking to the climate and timing for when the model was employed at Gillette and how it appears to stray from conventional wisdom some hundred years later.
I think if you were to focus on the market conditions and specifics of the price model strategy and how it impacted the market at that time in history it would have been more compelling as we relate it to present-day economics.
Not to be a negative-nancy, I thought your post was a nice read =)
Yes, it does seem like Mike once again, does not really understand the situation, and tries to ‘model’ systems that have allready worked and existed into a modern framework, that never works.
Also disposible razors did not even exist for a very long time after the double sided disposible razor BLADES.
You used to use a NON-disposible razor, install your razor blades into them, and keep the razor, but throw away the blade. It was not until much later that disposible razors even existed.
So trying to compare those two different things, which did not even exist at the same time, when you are talking about it makes no sense.. But ofcourse, from Mike that is the normal SNAFU..
Re: Re: Gillette
Re: Re: Gillette
What are you talking about? He never talks about disposable razors. The whole post is about selling cheap razors and expensive replacement blades.
Re: Re: Gillette
Perhaps you need to read the article before you start trying to attack mike. Drugs are bad mmmkay?
don’t believe you have debunked the cheap razor/expensive blade model nor proven it to be mythical.
Sorry. I wasn’t saying the overall model is a myth. But that the founding story about it is a myth… *and* that the conditions some insist must be there to work are a myth.
You should probably cover the carbon vs. stainless steel blades distinction at some point – Gillette had the patent on stainless steel blades (boy is *that* a dubious patent) and was in no rush whatsoever to bring the longer-lasting ones to market.
I guess stupid patents have been around for some time.
How about another example to the whole Razor-Razor Blade scenario:
Apple and the iTunes Store’s contents. When it came time for me to buy a new MP3 player, I didn’t even think about getting a Zune, or some other brand, I went straight to the iPod. Why? Because I had tons of iTMS songs, and had become practically dependent on iTunes for organizing and managing my songs.
When my contract with AT&T was up, did I immediately switch carriers? No, I got an iPhone 3GS, traded in my 3G, and stuck with them, because I had over $100 in apps already purchased (seeing as how Apple still has the issue of “no refunds ever”). The only thing that got me to jump switch to Sprint and Android, was the $50/month price difference in plans, and the fact that Android has the 24 hour trial, and most apps are free!
Re: Another example
Yes, the iTunes store is the ultimate realization of the razor/blades model. I bought an AppleTV a few years ago and was pretty disappointed to discover I couldn’t watch anything on it except through iTunes more-or-less proprietary format, and only through iTunes (unless I wanted to watch youtube)
Converting my own files was annoyingly slow and inconvenient and introduced audio sync problems etc., making the device essentially a $300 pay-to-rent movies box. I finally got some decent use out of the device when I hacked it to run XBMC which would let me play any format across the network, and enjoyed that tremendously until a problem with the remote/sensor kicked in.
I no longer have the device and have replaced it with a WDTV Live, which despite the slimmed down feature set, lets me play all my own stuff, in full HD without any conversions or need to hack the device. Apple continually tries to push the line as far back as possible, which is a shame, because their products would otherwise be hands down the winner.
Gillette makes a good product that people want, and they innovate, giving us new products to try and buy from a brand we trust. I’ve got the one that takes a triple A battery, I didn’t see the point of that at first, but buying the razor with 2 blades wouldn’t set me back much, so I tried it and it worked and I liked using it. I’m generally not a brand loyal kind of guy, but when it comes to my razor, I’ve found no reason to change, I guess it is that mental transaction cost. The best part is, my wife uses Schick razors, so, she never steals my blades!
Holy poop. Why the heck would you put a battery in a razor? Please tell me it is unrelated to shaving.
Re: Re: Lets think about this for a SECOND..
Knee jerks, allround..
Why the heck would you put a battery in a razor? Please tell me it is unrelated to shaving.
Some people just need to buy a clue dont they, if they cant see anything in something, then NO ONE can. Luckily some in this world take a broader view of things, and do not see the world through the very narrow blinkers that we mostly see from this place.
As for this article Mike, you are all over the place, It seems as if you dont know what side to be on, or if there is even a side for you.
Razer blades were around much longer than disposible blades, so your comparison, (or whatever it is) is flawed from the start.
As for why the heck you would put a bettery in a razor.
Look up CATHODIC PROTECTION
Read a bit, you never know you might ever learn something.!!!! that would be a bonus !!!
I could not imagine living my life where I did not know how things work and how things are, I feel I would become bitter (like Mike and AC) and complain loudly about everything I did not understand.. what a sad life that would be…
Re: Re: Re: Lets think about this for a SECOND..
you seem to be the exact mindless consumer you accuse others of being, who gladly buy anything new in the blind faith that it is “new, better”. do you really think that the gillette razor or the disposable gillette blades you buy today needs corrosion protection? jackass.
Re: Re: Re: Lets think about this for a SECOND..
Wow, thanks for clearing that up for everyone. Because certainly there is no reason for a battery in a razor other than for cathodic protection. Obviously, your knowledge and wisdom is unsurpassed across the intarwebs.
… power up to the Gillette Fusion Power Gamer razor with PowerGlide blades and gently pulsating Micropulses, allowing the blades to glide across your face with less razor drag and less shaving irritation
The goose that laid the golden egg
I am very interested by what is exchanged here, as I am currently writing a book on the subject. I recently wrote a blog post that might interest the readers: “Razor, razor blades and the goose that laid the golden egg” http://razwar.posterous.com/razor-razor-blades-and-the-goose-that-laid-th
As I studied the piece of history surrounding the creation of the company, I agree with Mike Mashnik. Indeed, the so called “razor and razor blade business model” was invented more “incidentally” that explicitly…
Whatever, it is more and more used… and my blog post is about the fact that some companies exaggerate and can kill the golden egg.. See also my market answer: http://www.razwar.com
It was a good model
I think what is also missing is that by initially creating an air of exclusivity, Gillette setting the stage for the mass market. It’s a common, and very successful, practice. What’s the best way to increase the austerity of a university? Reject 90% of the applicants, flat out. Of course you have to have a really good product. But rather than offering a really good product to everyone, only let a few have it initially. And charge them dearly for it.
I had never heard this story before, either side, really.
I will say, though, I have a mondo beard. For years I tried razors and electric razors and all kinds of things to tame the damn thing. The Mach III came out and voila, it works great, not a single cut on my skin and the beard was tamed… for many years… I even tried knockoff versions of the Mach III and knockoff blades: nothing worked as well as the original.
So while it cost me a lot more, no generic brand was up to cutting my beard.
Of course, now it is moot, as I let it grow out this year.
ha! That’l show them!
the flaw of this article
is that im still able to shave cheaply
where i cant do the exact same thing with all these othr industries they dont give anyhting cheap nor of value and its why piracy as an example exists so massively in ip circles
Razors as Metaphor
I, by happenstance, bought some double-edged Persona platinum Plus blades yesterday, ten for a buck, in the clearance aisles at Wal-Mart. I got them home and discovered I already had another ten pack from Persona I’d bought earlier. When I was ten and younger, I found the whole history of gillette razors and blades in a great closet my grandfather had, filled with old shaving soap, early blades, before the blue blade, some of them gold. A friend shoplifted a Schick double-edged razor in College which he gave to me. I’m 65 now and still use it. I recently discovered from another friend that one can shave without shaving cream in the shower, without even looking at a mirror. You could feel whether the beard was still there or not. After a month of so of that, I stopped. I wanted to return to using cheap shaving cream and the mirror model.
I’m fascinated by the cheap cell phone expensive service revolution that is supposedly going on. I never had a cell phone until 2010. I bought a cheap nokia 1208 with 10 cent a minute T-mobile service prepaid, that I now keep as a backup. I have since bought a Straight Talk prepaid that self pays $30 each month through a credit card for 1,000 Verizon minutes voice, 1,000 text messages and 30 megs of internet I never use. I nearly used that many voice minutes last month while travelling. But at home I use a free wet loop included with centurylink dsl at $46 a month, with google voice attached to make POTS-like ‘free’ phone calls at home. I read all the sturm and drang about smartphones, but ignore the so-called smart phone revolution. I believe the real revolution is the melting down of the high phone tariff model cell phone industry. Google’s Android just undercut Apple’s I-Phone in the last quarter, selling a phone for what it cost, without a supposed subsidy wherein the gouging tariff more than pays off the expense of the phone subsidy with an enormous profit for carrier and phone manufacturer alike. Yesterday, a friend who is a house painter told me he heard about a free phone spoofing caller ID App available with Google android. I explored phone spoofing with a credit card the least expensive way of doing it two years ago. Not cheap enough for me. I would like to have that Google Droid app on my Straight Talk. But you see, I believe I will have that app, and free, on the Straight Talk or some variation of it, eventually. And I will also have the free app that allows an I-Phone user to watch the DVDs one has on a hard drive at home on a laptop, in the air while circling, say, over Moscow. I have five computers but no printer because my system is paperless. When I want something printed, which is rarely, I have a friendly office with a printer, print it out for me. I don’t need a printed out airline tickets anymore. I can get one at the airport. My uncle, who uses printing and fax
equipment at home, recently sent me a paper copy of an Esquire article about Newt Gingrich. Wanting to send it to friends, I googled the article and sent it as email.
Somehow, this era reminds one of the early 1900s when the progressives started to whittle down the excesses of the robber barons. The Press which has reaped enormous revenues from Apple’s ad campaigns for the I-Pod, I-Phone and now the I-Pad, have been suppressing dissent about all these products and the I-Tunes associated with it. I wrote scathing letters to both the Times and the Post about this. The Times replied with a pile of I-Phone complaints a few days after one of the Google founders dropped off the board at Apple over the Google Voice App squabble. But both the Times and the Post are mostly maintaining radio silence as editorial policy in Apple stories. Fed by extraordinarily high ad revenues, the smart phone revolution is being kept aloft by a big print media and television-manufactured hype. The real revolution is in far cheaper prepaid cell phones, which are melting down the revenue per phone averages of all carriers, while manufacturers scramble to adapt to the temporary success of smartphones and the rise of cheaper prepaids.
In Texas I discovered a motel manager who has no cellphone nor a POTS phone at home. What he has instead is a jail broken generation 3 I-phone that he uses both at home and at work to make ALL of his phone calls over wifi networks. He paid $200 to a friend for it. I learned a few days later that Apple is filing for a copyright to get around the government agency that allowed jail broken I-Phone use. Apple wants to shut down those jail broken I-Phones, supposedly to prevent misuse of left behind data on the phones. But really to keep the comfy little empire Apple, AT&T and others run around the world, intact. This should have been enormous news in the part of the press dealing with new tech issues. It was not. The news was suppressed with other ‘news’ that threatens the interests of the big Ad Budgets at Apple and other players including Verizon, the latter trying to offset declining cell carrier revenues that are a byproduct of the prepaid phone revolution.
The Government has been slow to take up the cause of the discarded cellphone owner who has upgraded to get a ‘new’ phone, making the old one worthless, but still working fine if one wants to keep it. I expect this issue to rise to the fore in the next two years. I haven’t heard anything about it on Techdirt either, but I haven’t read every issue.
Last, I need to tell you a collusion story that happened in my area of the country and may have been replicated in other parts of the country. Verizon had no presence except roaming in the La Crosse region in Wisconsin where I live. Last August, months after it had bought Alltel, a prepaid carrier that operated in my region, Verizon began marketing in this area. But in October, Verizon rolled out its trac phone alliance with Wal-Mart, using samsung phones. The Straight Talk phones immediately started to undermine Verizon’s market push in the area. A startled Verizon persuaded Wal-Mart to stop selling the Straight Talks in its stores in this area. You could still buy them in, say, Winona, Minnesota, where I bought mine in January or February, 2010. But you couldn’t find them in Sparta, Tomah, Onalaska or South La Crosse stores. You could find them in Black River. Wal Mart electronics managers were disappointed. One of them in Sparta started going around the blockade, ordering them in blocks of two dozen or so at a time, but usually available in only a single model when ordered that way. He was successful, other Wal-Mart managers in the area found out about it, and started making small orders too. By now the blockade is over, and Straight Talks are available in all the stores. I don’t know in how many areas of the country this Verizon-Wal-Mart collusion went on, but I suspect there were many.
I have about 25 of those platinum plus era doubled edged blades now. I suspect I won’t have to buy anymore, ever!
Re: Razors as Metaphor
I semi-skimmed this post and saw some interesting key words, but without as much as a line break, I decided not to read it. Learn what a paragraph is!!!
Re: Re: Razors as Metaphor
Re: Re: Re: Razors as Metaphor
Actually, I’ve seen much worse written in red ink on an English paper. Who is the troll?
Troll: One who posts a deliberately provocative message to a newsgroup or message board with the intention of causing maximum disruption and argument.
Re: Razors as Metaphor
Your writing style is good, and very readable, but you switch subtopics a bit much (I do the same thing). You also need to break up your writing into paragraphs in the worst way. I had to stop about a quarter of the way in because the lack of breaks in the text was making me skip to the wrong lines, and straining my eyes.
Re: Razors as Metaphor
Wow that’s a big paragraph! Do it again!
Re: Razors as Metaphor
Why no one expounded on the ARMY GILLETTE RAZOR BLADE, PENCIL LEAD and SAFETY PIN along with Hi Impedance (Hi~z) Ear Phone = a EMERGENCY RADIO RECEIVER.
The SECRET is, The RCA COMPANY owned Major Armstrong’s PATENTS on Superheterodyne Radio Receiver circuit, so they CHANGED the RAZOR BLADES to FOIL LITTLE BOYS from building FREE BATTERYLESS RADIO SETS in the 1950’s!
When the WAVE of SOLID STATE, GERMANIUM “TRANSISTOR” RADIOS, using a GERMANIUM 1N34 Diode as DETECTOR and CK7488
and similar TRANSISTORS, requiring a 9 Volt Battery,
EVERY ONE WANTED ONE!
But ENTEREPOURnering LADDIES were PREVENTED from making FREE POWER, NO BATTERY Radios from DADDY’S USED GOLD BLADE!
Re: Razors as Metaphor
When I saw the length of your reply, I thought “incoherent diatribe?”, but when I started reading I was immediately hooked. I read every word, and enjoyed it. I understood the relevance to Mike’s post, and I took an uncritical “make of this what you will” stance as a reader. I hope you will contribute more.
I “retired” this year at 62 (= currently unemployed). I liked the riff on the “cheap cell phone, expensive service” idea. The “subsidized smart phone, expensive service” pricing model is for working people. My wife is a busy executive type, loves her iPhone. I, however, am looking for lowest cost basic service. I bought a low-cost Samsung phone at a Verizon store, and subscribed to their most basic prepaid plan: $15 per month minimum, 25 cents per minute. That may sound cheap, but I typically don’t consume $15 per month.
My preference would be to pay (a low cost) only when I use the phone. When I was in the safety razor market, I could fairly easily predict how many blades I would use in a month or a year, so I could budget accordingly. But in the cell phone market, I can’t predict how much bandwidth I will use, as I can go days or weeks without using it. I would rather not help to keep the service provider afloat with a use-it-or-lose-it set monthly fee. Let the high-end users subsidize the infrastructure cost, so that we bottom-feeders can pay only a small incremental cost for actual bandwidth consumption.
Other thoughts. My current cell phone setup has a very low annoyance factor. I have a credit card set to auto-renew, or to fund the account on those rare occasions when I consume all 60 minutes in less than one month. And I found it interesting that the e-readers (in my case the Nook) offer no-incremental-cost 3G service, as well as WiFi. It seems improbable that the cost of the wireless service is built into the cost of the platform. It suggests to me that there is a very low incremental cost for typical bandwidth consumption by the e-readers – an entire book takes a very short time to download. The payoff for the bookseller is that it’s convenient, and cheaper, for me to buy an electronic book. There would probably be very little profit for Verizon to offer me true pay-per-use, unless they typically have lots of excess capacity on their system.
Re: Re: Razors as Metaphor
I have a pre-pay phone, it costs me about $50 per year. No fancy apps but it does text. And with pre-pay there is no roaming. Some people just do not need to pay that much when they do not use it.
Re: Razors as Metaphor
I’m going to assume that paragraph was all about how much you hate formatting.
Re: Razors as Metaphor
Is it possible that your comment is longer than the actual story? Also, is that an onion hanging from your belt?
Re: Re: Razors as Metaphor
“We couldn’t download green onions, because of the DDoS attacks…”
Re: Razors as Metaphor
Fascinating, and very relevant post. You do bounce around among topics more than you probably should, and paragraphs would be nice, but I (unlike a couple of ass-hats in this thread) did not mind because the content is good.. Great post!
Re: Razors as Metaphor
just wonder, if ,our life has become easier or difficult
or artificial or hectic with so called developments !!
….you did not disprove the Gillette Razor/Blade business model
(Ryan Zeigler, above, is correct).
You merely described long term changes in that market, as sellers & buyers adjusted to typical dynamic market conditions.
For some, that business model drives them to a competitor.
Kind of funny this article comes out now. About nine months ago, I switched to a straight razor. Having very bad ingrown hairs and razor burn, and someone suggested I consider researching a straight razor to see if that solves my problem (which it did). During my research, I read the Gillette cheap razor myth exactly as this article suggested it. What I found by switching to a straight razor is the razor is expensive, but it lasts forever, mitigating all future costs of buying replacement blades. Kind of makes me wonder why people switched away from the straights to Gillette’s safety razors to begin with.
“…since it could use the patents to exclude competitors from offering compatible blades. But, it did not.”
Heh Roseanna Danna, you are mistaken. Gillette did enforce his patents. In fact, he regarded the litigation as essential to the future of his company. The suit went poorly until his inside counsel took over the case. See KING GILLETTE: THE MAN AND HIS WONDERFUL SHAVING DEVICE by Russell Adams.
Heh Roseanna Danna, you are mistaken. Gillette did enforce his patents.
Stevo, try reading in context next time. I didn’t say that Gillette didn’t enforce the patents. I was referring to the beginning of the sentence about how having the patents was the perfect time to use the famed “razors & blades” strategy.
Of course the best way to save on the name-brand blades, yes I do use Gillete’s Fusion Power and blades, is to take care of them intensively. After every shave, I clean my blades in 70% alcohol. I buy a 16pk of blades and can use 1 blade for 6 months. I’m sure I can go longer, but I figure using 2 a year is enough. Even if you changed them as often as you should change your toothbrush (you do change it every 3 months, don’t you) you’re still ahead of the game in price and value!
I too can make a blade last six months or so. Check out this link on sharpening your used, dull blades. It really works; I do it every week and have not bought blades for about two years.
Disposable razors are a total rip-off. I smile to myself every time I sharpen one of mine, knowing Gillette just lost a sale.
After reading and re-reading all the information, Im wondering about nextgen services.
What happens when someone buys into a 4G wimax broadband plan and uses a smartphone?
Since most high end smartphones are capable of using skype or some other voice/video client, OR placing calls over a wifi / wimax network, does this mean that you can buy broadband and then bypass the telcos all together?
If so shouldn’t someone be trembling in fear? (ok that was more than one question)
I remember getting FREE razors in the mail
I remember getting FREE razors in the mail. And then the blades were like $10 for 3 or something like that. I just electric shaver.
Definately brand loyal.
Brand loyalty is a factor for me. When I’m spending a lot of money then I like to know what I’m getting will be a quality product that will last.
My first razor was a Gillette. My current razors are Gillette’s. I have the Mach 3 and it’s battery powered successor. My next razor might be something different. I’ve noticed Gillette blades just don’t seem to last as long as they used to.
So Gillette being a brand that’s now not giving me the quality I’m looking for might well be a brand I’m about to leave behind.
interesting fictional interpretation
I’ve recently read a book, Makers by Cory Doctorow which contains as a significant plot point an up-to-date take on the Gillette “blades and razor” concept. I wouldn’t dare give away anything, but Cory too seems to believe that old story about Gillette is off-the-mark.
In Makers he seems to say that if you provide a product that people use and enjoy using, you’ll be really successful even if cheaper knock-offs come along.
I tend to agree. Looking at my own buying patterns, I seem to become very loyal to companies who make products that really deliver. On the other hand, when a company that I previously trusted starts to have some rather questionable practices (for example, Apple and their walled garden and other issues) I tend to react like a jilted lover with a great deal of resentment. For example, if there’s a company whose products I loved and I found out they were doing something I found objectionable (say the quality dropped or they started really limiting my choices) I will not only stop buying from that vendor, but I’ll make a point of letting other people know about my resentment. That’s how a once-Sony-lover could become a Sony-hater or a once-Apple-lover could become an Apple hater.
In other words, note to corporations: Don’t worry about tricky strategies to get people to part with their money. Just make really good products and don’t do evil stuff. Simple route to success.
Mental transaction costs
Mental transaction costs are a very interesting concept. I used to only pirate computer games, even at a time when I had started working and COULD afford to buy them. Of course, pricing was a big reason for me to do so; if I didn’t know whether or not I was going to enjoy a game, why would I put down 60 bucks?
Enter Steam. I bought my first game on steam about two years ago now, and I’ve downloaded only three or four cracked games since–and played none of them for more than half an hour (so they would have been “wasted money” had I bought them). I realized something that Valve are doing really well: they’re keeping mental transaction costs low. You know that if it’s on Steam, it’s generally going to work. You know that once you buy a game on steam, you have it forever, even if your harddrive fails. You know you’ll get patches, automatically, not having to find them (or even make sure you download the right version of a patch). With piracy, there are mental transaction costs involved: do I trust this source not to put a trojan into the crack executable? Will this patch work with that rip? Will my friend, who got a different pirated version, be able to play with me?
It turns out not having to worry about these things is worth 50-60 bucks a game.
(Sorry this was OT as far as the Gilette model is concerned, but I found the concept of mental transaction costs very intriguing)
The Cost Of The Blades
is the real close shave to your income. I am now retired so I am pretty much out of the shaving everyday loop. When I did work I had to shave 7 days a week. I tried just about everything and I have to say I could never find a blade or blade system either mechanical or electric that ever lived up to its claims. To be honest now when I have to shave I just use disposable razors. They work just fine for me and they are really cheap. Also a couple of times in my life I sold shaving supplies. The only exception that I can think of was an electric razor made by the Remington Company with blades specifically designed for people who were prone to ingrown facial hair. It was discontinued several years ago. I don’t know if it ever made a come back. It is true some razors do work better for some people but I think its just a waste of money to keep running out every time a new one comes out.
Low barrier to entry
Could the initial purchase be made artificially low to entice the buyer to try the product? Who would buy a razor for $2,000 today and get ten cent blades forever? What if the product stinks? What if it’s totally unusable? By letting the customer try it for a marginal price, it would build brand loyalty if the product worked as promised and outperformed competition. Then, the manufacturer trades on the goodwill and brand loyalty to sustain the business model.
More blades = faster gumming
I have a difficult enough time trying to get the little hairs out from between two blades. Three is worse and four… well see the pattern?
I bought a little precision ground double edge that takes $1.67 for ten blades and the shave is so much better.
People are suckers, I “was” but I’ve seen the light. 🙂
Patents for startups promotion will start on October 25, 2010:
Gillette hook you into buying their cheap razors then hit you on the price of their replacement blades afterwards!
Wisdom in Marketing
Yessss, the replacement blades are expensive, but when is the last time you bought toner for an ink jet or a battery for a cell phone? Almost cheaper to buy another printer or battery….It’s called Market Trapping the niche….
I have been using Gillette for a year and a half and the products is now in a pile on my counter! No need to mention about the quality but of course, i love them
Opinion about the best shaving tools
To say the truth, I also used Gillette razors and blades. Most people in the developed world have, that’s why they’re such a successful company. But actually, I recommend anyone to use either electric razors, because they’re more environmentally friendly and have obvious advantages, or safety razors for wet shavers, because they also have some advantages when compared to other manual razors. Safety razor blades cost less and pollute less as well.
gillate is the best for all generation.tham=nks for sharing this great artical.
I have always preferred using an electric shaver, I don’t like to use shaving cream and I like the fact that I don’t need a sink and water to shave. Safety razors are okay but they tend to get clogged up quick with hard water stains and they are a pain to clean.
You should have a look at our <a href=”http://electricshaverlab.com/best-braun-electric-shavers/”>Best Braun Shavers</a>