The bait and hook model is very similar to the razor and blades model. The only difference is the customer pays the cost price for the main device, whereas he/she receives it for free with this bait and hook model. The consumables are then sold with a higher margin in order to compensate the purchase costs of the main product.
A well-known example is:
- Mobile phone plans with free device
Before you start
- Ensure the usage of consumables is high enough to cover the recruitment costs and beyond.
- Ensure consumables can be produced at a large scale and at low cost
How to start?
- Test the offer on a limited audience
What are the key success factors?
- Maintaining a high level of usage of the consumables
- Sustain the usage of the same main device as long as possible
How to cope with threats?
- Customers may use the device with alternative consumables.
- Make it technically impossible for the device to use other consumables
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Make the possibility of using other consumables your USP
- Create special offers in collaboration with alternative consumables
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