Moving beyond the Razor-Blade Business Model

Almost every Business Model Class speaks about Gillette’s excellent idea of what is now popularly known as the ‘Razor Blade Business Model’. So many companies have milked this model. Examples include: Camera Films, Mobiles, Games, etc

There are even examples of the ‘Reverse Razor Blade Business Models’. Example: Apple.

Here is a study from a professor (http://www.sciencedirect.com/science/article/pii/S0007681316000124) that questions if this model has lived its life and is facing its end-of-life. The study shows how the time has come for organisations to look at better pricing models. The environment in which we live today provides a lot more transparency and access. There are also institutional voids in emerging economies and Intellectual Property is not respected the same way as in the West. With so many new and changed forces, it is time for organisations to innovate with their business models and more importantly their revenue models.

Happy Reading and Happy Thinking!