Razor and blades model, a model that sticks!
The razor and blades model is certainly one of the best known basic models for operating in the market. But how do you go about it and what are the risks?
The razor and blades model is one of the special earning models that is currently slowly climbing to the top. The razor and blades model offers you an original way to operate on the market. Of course we want to encourage all our Hustlers to take advantage of the possible opportunities in the market and therefore in this blog we will explain to you what the bait model is, what the advantages and disadvantages are and which examples you can recognize this earnings model by.
What is the razor and blades business model?
The razor and blades model, or the bait model, is a rather remarkable way to make a living.
Namely, you sell a unique product that is relatively inexpensive, but only works with a more expensive matching product of specifically the same brand. So the matching product only fits into that one unique product, otherwise you have nothing to show for it.
This model can be a bit similar to the service model, but with the bait model, you sell a cheap product and actually only make money with the additional supplies for that product.
So the point of this revenue model is that you have to develop a unique product. Preferably it must be a product that does not yet exist and which you can then patent. This means that no one else can profit from your original and distinctive product. Of course you can also take an existing product such as a coffee machine, but then you must design the cups in such a way that they can only be used for your machine. In addition, among all the existing competitors, you must be able to make yourself stand out with a Unique Selling Point. And you need to be able to showcase yourself which is relatively difficult in our current society full of competitors.
Pros and cons of the razor and blades model
Pros
- You lure people to your product and then they are hooked
By marketing your product in an attractive way, you interest the consumer to buy your relatively cheap basic product (bait). Then you hook the consumer by making a profit on the expensive accompanying product. It is a tying situation in which you, as it were, imprison the consumer (vendor lock-in). - Bonding through dependency and contact moments
In order to keep using your product, the consumer must keep coming back to you. This brings a nice advantage because they cannot easily switch to another provider. This often happens with normal goods. Now you play directly into customer loyalty and are provided with regular contact moments in which you could ask for feedback. - Stable earnings model
The bait model is a stable earnings model because customers cannot just leave you. Even if they are not completely satisfied: consumers usually go for the easier route so once a customer is on the hook, in most cases he will remain a consumer. Your turnover will also remain fairly stable because the required products must be purchased regularly.
Cons
- Make sure you have a killer basic product
If your product/service does not meet the customer’s wants and needs, you may have a problem. Your product must be able to contribute something and cannot contain complications.
After all, the consumer may go for the easier route, but in an extreme (dissatisfied) situation, the consumer just takes the cost for granted and they switch without any effort.
So keep in mind that your product adds value and in case of an emergency, you need to be there for the consumer. Good service already does half the job! - Supporting the model to counteract customer loss
After a while, the consumer may be fed up with the product. So also support the model: come up with innovations, additions or additional services. It may already be a unique product, but it should also remain a unique product. So keep it interesting! You already have the consumers in your pocket, now it’s just a matter of maintaining those relationships. Make sure the customer feels heard, contact them regularly and support them in need. - Not offering refills can hinder customer loyalty
Refill is very important once you’ve found your customers. If you want them to remain loyal to your product, you must be able to continue to provide the necessary service and resources to these consumers. If not, it becomes very easy to lose them again.
Have you read all of our other blogs on revenue models? Goods sales, subscription model and the service business model are also promising ways to Hustle!
Razor and blades model: some examples
The basic principle is that the baiting model requires a unique product with additional necessities. Still, to give you an idea of the revenue model, we have some examples that present the bait model in a successful way:
Coffee Machines
The coffee machine is one of the best known ways. The Nespresso coffee machine can only be used if you purchase the cups from Nespresso. The machine is relatively cheap while the cups are expensive. But without the cups there is no coffee and that is why entrepreneurs do this very smartly.
Razor blades
The same principle applies to razor blades. Are you buying a Gillette? Of course you have to buy the brand’s expensive blades with it, smart huh? This way they keep you connected to their brand and try to keep you a customer for a longer period of time.
Electric toothbrushes
The toothbrushes that you need to put on the electric toothbrush can be bought separately. The more expensive brushes you need to be able to replace every certain time of course, so this is a successful way that fits into this list.
Printers
Last but not least! The printer is also one of the most famous way of the bait model. Of course, you can’t print anything out without the expensive ink cartridges. This is also a matching product that you need to replace regularly.
