Razor-Razorblade Model

AAA

DEFINITION of 'Razor-Razorblade Model'

A business tactic involving the sale of dependent goods for different prices - one good is sold at a discount, while the second dependent good is sold at a considerably higher price.

INVESTOPEDIA EXPLAINS 'Razor-Razorblade Model'

If you've ever purchased razors and their replacement blades, you know this business method well. The razors are practically free, but the replacement blades are extremely expensive.

The video game industry is another user of this pricing strategy. They sell the game consoles at a relatively low price, recouping the lost profits on the high-priced games.

RELATED TERMS
  1. Eating Someone's Lunch

    The act of an aggressive competition that results in one company ...
  2. Loss Leader Strategy

    A business strategy in which a business offers a product or service ...
  3. Porter's 5 Forces

    Named after Michael E. Porter, this model identifies and analyzes ...
  4. Protected Cell Company (PCC)

    A corporate structure in which a single legal entity is comprised ...
  5. Plant Patent

    An intellectual property right that protects a new and unique ...
  6. Patent Agent

    A professional licensed by the United States Patent and Trademark ...
Related Articles
  1. Investing Basics

    Industry Handbook

  2. Fundamental Analysis

    Measuring Company Efficiency

  3. Investing

    Power Up Your Portfolio With Video Game ...

  4. Investing

    What is the Razor/Razorblade model?

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center