The principle of this model is as old as the razor blade itself. The customer buys the main device (the razor) at cost price. In order to use it, he needs to buy consumables (blades) which are sold at a higher margin.
Well-known examples are:
- Home printers
- Dolce Gusto
This model makes it easy to distribute the product very quickly and to cover the development and manufacturing costs. Profit will be generated from the sale of consumables.
Before you start
- Ensure the usage of consumables is high enough to make a profit
- Ensure consumables can be produced at large scale and low costs.
- Ensure the benefits of the main product outweigh any possible issues.
How to start?
- Test main product with experiments at different levels of costs and certainty.
What are the key success factors?
- Maintaining a high level of usage of the consumables
How to cope with threats?
- Competitors that sell only consumables at a lower price
- Protect consumables with patents
- Ensure products only work with own-branded consumables
- Create innovative consumables that are difficult to imitate (e.g. new Nespresso flavours)
- Environmental impact (legislation/image)
- Legislation
- Create local circular economy (local jobs)
- Image
- Produce consumables from recycled products
- Finance sustainable projects
- Legislation
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