31:
410:. The basic idea is that consumers are harmed by being forced to buy an undesired good (the tied good) to purchase a good they actually want (the tying good), and so would prefer that the goods be sold separately. The company doing this bundling may have a significantly large market share so that it may impose the tie on consumers, despite the forces of market competition. The tie may also harm other companies in the market for the tied good, or who sell only single components.
212:
Computer printer manufacturers have gone through extensive efforts to make sure that their printers are incompatible with lower cost after-market ink cartridges and refilled cartridges. This is because the printers are often sold at or below cost to generate sales of proprietary cartridges which will
103:
about
Gillette is that he realized that a disposable razor blade would not only be convenient, but also generate a continuous revenue stream. To foster that stream, he sold razors at an artificially low price to create a market for the blades. But Gillette razors were expensive when they were first
344:
Mobile handsets provided with monthly usage contracts are often provided at below cost price or even free of charge, particularly if obtained as an upgrade from an older model. The monthly contract funds the handset cost and in many countries, the contract will include a minimum contract term which
413:
Another common example comes from how cable and satellite TV providers contract with content producers. The production company pays to produce 25 channels and forces the cable provider to pay for 10 low-audience channels to get a popular channel. Since cable providers lose customers without the
225:
to prohibit reverse engineering by third-party ink manufacturers. Another method entails completely disabling the printer when a non-proprietary ink cartridge is placed into the machine, instead of merely issuing an ignorable message that a non-genuine (yet still fully functional) cartridge was
398:
Tying is a variation of razor and blades marketing that is often illegal when the products are not naturally related, such as requiring a bookstore to stock up on an unpopular title before allowing them to purchase a bestseller. Tying is also known in some markets as 'Third Line
Forcing.'
266:
and began publishing cheaper games of comparable quality, Atari was left without a source of profit. Lawsuits to block
Activision were unsuccessful. Atari added measures to ensure games were from licensed producers only for its later-produced 5200 and 7800 consoles.
169:
sold its cameras at low prices and enjoyed large profit margins on the consumables of the trade, such as film, printing supplies, and processing chemicals. While this strategy worked for many years, it was challenged in the late 20th century when a rival,
244:
383:
and discounts have proven to be popular with economy-minded consumers, who visit sites which use product samples as link bait. The business model of these sites is to attract visitors that will click through to complete affiliate offers.
371:
makes extensive use of this business model, as many products are promoted as having a "free" trial, that entice consumers to sample the product and pay only for shipping and handling. Advertisers of heavily promoted products such as
335:
Ever since the beginning of the commercial nuclear power industry, the business model has centered on selling the reactor at cost (or at a loss) and making its profits off fuel-supply contracts by exploiting vendor lock-in.
213:
generate profits for the company over the life of the equipment. In certain cases, the cost of replacing disposable ink or toner may even approach the cost of buying new equipment with included cartridges. Methods of
194:
The razor and blades model may be threatened if competition forces down the price of the consumable item. For such a market to be successful, the company must have an effective monopoly on the corresponding goods.
274:
have often been sold at a loss while software and accessory sales are highly profitable to the console manufacturer. For this reason, console manufacturers aggressively purse legal action against carriers of
849:
262:
games. Atari was initially the only developer and publisher of games for the 2600; it sold the 2600 itself at cost and relied on the games for profit. When several programmers left to found
353:
Consumers may also find other uses for the subsidized product rather than use it for the company's intended purpose, which adversely affects revenue streams. This has happened to "free"
818:
236:
376:
targeting dieters hope the consumer will continue paying for continuous shipments of the product at inflated prices, and this business model has been met with much success.
545:
303:, which was considerably less expensive to produce than its rivals, so it retailed at break-even or higher prices. In the following generation of consoles, both
231:
478:
853:
320:
324:
284:
34:
A razor with its attached blade. With the razor and blades model, the razor would be inexpensive but the blades would come at a significant cost.
676:
174:, introduced more economical film and processing methods. Finally, digital photography made the strategy obsolete, as it needs no consumables.
734:
990:
894:
517:
826:
66:
whose ink cartridges are significantly marked up in price, coffee machines that use single-use coffee pods, electric toothbrushes, and
913:
610:
283:
due to a belief that the resulting possibility of unauthorized or prohibited copying causes a loss in profits. Particularly in the
222:
965:
955:
707:
650:
970:
787:
30:
542:
239:
ruled that circumvention of
Lexmark's ink cartridge lock does not violate the DMCA. On the other hand, in August 2005,
985:
980:
407:
153:
62:, which do not depend on complementary products or services. Common examples of the razor and blades model include
414:
popular channel, they are forced to purchase many other channels even if they have a very small viewing audience.
423:
295:, had high manufacturing costs so they sold their consoles at a loss and aimed to make a profit from game sales.
960:
484:
473:
70:
which require additional purchases to obtain accessories and software not included in the original package.
73:
Although the concept and the catchphrase "Give 'em the razor; sell 'em the blades" are widely credited to
552:(September 13, 2010). U of Chicago Law & Economics, Olin Working Paper No. 532. Available at SSRN:
345:
has to be carried out. This will often work out to be more expensive than buying the phone outright.
243:
won a case in the United States that allowed them to sue certain large customers for violating their
148:
20:
742:
683:
132:, looked to China to expand their business. Representatives of Standard Oil gave away eight million
368:
129:
521:
917:
880:
428:
354:
271:
94:
74:
67:
47:
611:"Encountering Chinese Networks: Western, Japanese, and Chinese Corporations in China, 1880-1937"
196:
24:
975:
575:
467:
461:
456:
439:
393:
186:
cameras are sold at a low price, while the film they use costs as much as $ 2.00 per photo.
549:
199:
to destroy a smaller competitor is not covered here.) This can make the practice illegal.
876:
373:
182:
Instant cameras also follow the razor and blades business model. For example, Fujifilm's
46:
in which one item is sold at a low price (or given away) in order to increase sales of a
764:
614:
489:
380:
292:
214:
108:
expired in the 1920s: it was his competitors who invented the razors-and-blades model.
63:
59:
43:
453:, for an item that is sold below cost in an effort to stimulate other profitable sales
949:
312:
288:
133:
850:"Microsoft Xbox One Hardware Cost Comes in Below Retail Price, IHS Teardown Reveals"
711:
125:
100:
78:
450:
445:
165:
In its decades as the dominant photographic film producer in the United States,
144:
55:
51:
795:
263:
259:
937:
735:"The making of the Xbox: Microsoft's journey to the next generation (part 2)"
308:
557:
319:
respectively, at a loss, with the practice continuing with the concurrent
634:
570:
403:
358:
316:
300:
296:
171:
137:
82:
434:
276:
240:
105:
19:"Free gift" redirects here. For the common example of tautologies, see
682:. Northwestern University Kellogg School of Management. Archived from
677:"When Does Aftermarket Monopolization Soften Foremarket Competition?"
362:
280:
218:
183:
553:
217:
include designing the cartridges in a way that makes it possible to
255:
166:
136:
or sold them at greatly reduced prices to increase the demand for
29:
877:"Kirk Sorensen @ PROTOSPACE on Liquid Fluoride Thorium Reactors"
304:
116:
This model has been used in several businesses for many years.
819:"Sony expects to recoup PlayStation 4 hardware loss at launch"
788:"Sony taking big hit on each PS3 sold; Xbox 360 in the black"
464:, offering several products for sale as one combined product
470:, selling more product than is beneficial to the consumer
442:, an event in which samples of a product are distributed
651:"Why Polaroid Photography Survives in the Digital Age"
237:
United States Court of
Appeals for the Sixth Circuit
104:introduced, and the price only went down after his
431:, a good that should be consumed with another good
143:Among American businessmen, this gave rise to the
899:Australian Competition & Consumer Commission
613:. University of California Press. Archived from
124:With dominance in the American domestic market,
361:services and contributed to the failure of the
157:was a fictional treatment of the phenomenon.
8:
708:"Sony promises more PlayStation 2 consoles"
311:have continued to sell their consoles, the
287:and beyond, Sony and Microsoft, with their
232:Lexmark Int'l v. Static Control Components
221:certain parts or aspects, or invoking the
604:
602:
479:There ain't no such thing as a free lunch
938:Trade Practices Act – Third Line Forcing
511:
509:
507:
505:
258:had a similar problem in the 1980s with
558:https://dx.doi.org/10.2139/ssrn.1676444
520:. The Industry Standard. Archived from
501:
571:"Why $ 0.00 is the Future of Business"
23:. For the historical English tax, see
569:Anderson, Chris (February 25, 2008).
406:, have historically been regarded as
7:
914:"Two million CueCats at $ 0.30/each"
848:Mather, Steven; Rassweiler, Andrew.
402:Some kinds of tying, especially by
85:did not in fact follow this model.
649:Jones, Laura (25 September 2018).
299:had a different strategy with its
14:
554:https://ssrn.com/abstract=1676444
327:generations of console hardware.
916:. BoingBoing.net. Archived from
883:from the original on 2021-12-21.
879:. Gordon MacDowell via YouTube.
223:Digital Millennium Copyright Act
54:supplies. It is different from
40:razor and blades business model
516:Martin, Richard (2001-08-06).
147:"Oil for the lamps of China."
1:
786:Bangeman, Eric (2006-11-16).
543:The Razors-and-Blades Myth(s)
991:Bundled products or services
817:Phillips, Tom (2013-09-20).
733:Takashi, Dean (2011-11-15).
710:. 2011-01-15. Archived from
357:with expensive proprietary
1007:
391:
154:Oil for the Lamps of China
92:
18:
424:Aftermarket (merchandise)
379:Websites specializing in
895:"Choosing a mobile plan"
60:product sample marketing
474:Promotional merchandise
966:Economics catchphrases
956:Advertising techniques
765:"GameCube sales brisk"
270:In more recent times,
77:, the inventor of the
35:
767:. CNN. April 12, 2002
435:Consumption subsidies
56:loss leader marketing
33:
971:Marketing techniques
285:sixth generation era
149:Alice Tisdale Hobart
21:Tautology (language)
901:. 18 December 2013.
714:on 14 February 2001
541:Picker, Randal C.,
369:Affiliate marketing
272:video game consoles
251:Console video games
130:John D. Rockefeller
68:video game consoles
986:Types of marketing
981:Selling techniques
829:on 6 December 2013
745:on 3 December 2011
609:Cochran, Sherman.
548:2017-06-22 at the
518:"The Razor's Edge"
429:Complementary good
355:personal computers
95:King Camp Gillette
75:King Camp Gillette
48:complementary good
36:
365:barcode scanner.
203:Specific examples
197:Predatory pricing
25:Benevolence (tax)
998:
940:
935:
929:
928:
926:
925:
909:
903:
902:
891:
885:
884:
872:
866:
865:
863:
861:
852:. Archived from
845:
839:
838:
836:
834:
825:. Archived from
814:
808:
807:
805:
803:
794:. Archived from
783:
777:
776:
774:
772:
761:
755:
754:
752:
750:
741:. Archived from
730:
724:
723:
721:
719:
704:
698:
697:
695:
694:
688:
681:
672:
666:
665:
663:
661:
646:
640:
632:
626:
625:
623:
622:
606:
597:
594:
588:
587:
585:
583:
566:
560:
539:
533:
532:
530:
529:
513:
468:Product churning
462:Product bundling
457:Opportunity cost
408:anti-competitive
394:Tying (commerce)
1006:
1005:
1001:
1000:
999:
997:
996:
995:
961:Business models
946:
945:
944:
943:
936:
932:
923:
921:
912:Cory Doctorow.
911:
910:
906:
893:
892:
888:
875:Kirk Sorensen.
874:
873:
869:
859:
857:
856:on 9 April 2014
847:
846:
842:
832:
830:
816:
815:
811:
801:
799:
792:ArsTechnica.com
785:
784:
780:
770:
768:
763:
762:
758:
748:
746:
739:venturebeat.com
732:
731:
727:
717:
715:
706:
705:
701:
692:
690:
686:
679:
674:
673:
669:
659:
657:
655:Verve Portraits
648:
647:
643:
633:
629:
620:
618:
608:
607:
600:
595:
591:
581:
579:
568:
567:
563:
550:Wayback Machine
540:
536:
527:
525:
515:
514:
503:
498:
420:
396:
390:
351:
342:
333:
253:
245:boxwrap license
210:
205:
192:
180:
178:Instant cameras
163:
128:and its owner,
122:
114:
97:
91:
64:inkjet printers
28:
17:
12:
11:
5:
1004:
1002:
994:
993:
988:
983:
978:
973:
968:
963:
958:
948:
947:
942:
941:
930:
904:
886:
867:
840:
809:
798:on 6 July 2012
778:
756:
725:
699:
675:Yuk-fai Fong.
667:
641:
627:
598:
589:
561:
534:
500:
499:
497:
494:
493:
492:
490:Vendor lock-in
487:
482:
476:
471:
465:
459:
454:
448:
443:
437:
432:
426:
419:
416:
392:Main article:
389:
386:
350:
347:
341:
338:
332:
331:Nuclear energy
329:
252:
249:
215:vendor lock-in
209:
206:
204:
201:
191:
188:
179:
176:
162:
159:
134:kerosene lamps
121:
118:
113:
110:
93:Main article:
90:
87:
44:business model
16:Business model
15:
13:
10:
9:
6:
4:
3:
2:
1003:
992:
989:
987:
984:
982:
979:
977:
974:
972:
969:
967:
964:
962:
959:
957:
954:
953:
951:
939:
934:
931:
920:on 2014-04-05
919:
915:
908:
905:
900:
896:
890:
887:
882:
878:
871:
868:
855:
851:
844:
841:
828:
824:
823:Eurogamer.net
820:
813:
810:
797:
793:
789:
782:
779:
766:
760:
757:
744:
740:
736:
729:
726:
713:
709:
703:
700:
689:on 2006-12-08
685:
678:
671:
668:
656:
652:
645:
642:
639:
635:
631:
628:
617:on 2008-06-09
616:
612:
605:
603:
599:
593:
590:
578:
577:
572:
565:
562:
559:
555:
551:
547:
544:
538:
535:
524:on 2008-09-12
523:
519:
512:
510:
508:
506:
502:
495:
491:
488:
486:
483:
480:
477:
475:
472:
469:
466:
463:
460:
458:
455:
452:
449:
447:
444:
441:
438:
436:
433:
430:
427:
425:
422:
421:
417:
415:
411:
409:
405:
400:
395:
387:
385:
382:
377:
375:
370:
366:
364:
360:
356:
348:
346:
340:Mobile phones
339:
337:
330:
328:
326:
322:
318:
314:
313:PlayStation 3
310:
306:
302:
298:
294:
290:
289:PlayStation 2
286:
282:
278:
273:
268:
265:
261:
257:
250:
248:
246:
242:
238:
234:
233:
227:
224:
220:
216:
207:
202:
200:
198:
189:
187:
185:
177:
175:
173:
168:
161:Eastman Kodak
160:
158:
156:
155:
150:
146:
141:
139:
135:
131:
127:
119:
117:
111:
109:
107:
102:
96:
88:
86:
84:
80:
76:
71:
69:
65:
61:
57:
53:
49:
45:
41:
32:
26:
22:
933:
922:. Retrieved
918:the original
907:
898:
889:
870:
858:. Retrieved
854:the original
843:
831:. Retrieved
827:the original
822:
812:
800:. Retrieved
796:the original
791:
781:
771:February 26,
769:. Retrieved
759:
747:. Retrieved
743:the original
738:
728:
716:. Retrieved
712:the original
702:
691:. Retrieved
684:the original
670:
658:. Retrieved
654:
644:
637:
630:
619:. Retrieved
615:the original
596:Picker, p. 3
592:
580:. Retrieved
574:
564:
537:
526:. Retrieved
522:the original
485:Trojan horse
412:
401:
397:
378:
367:
352:
343:
334:
269:
254:
230:
228:
211:
193:
181:
164:
152:
142:
126:Standard Oil
123:
120:Standard Oil
115:
112:Applications
98:
79:safety razor
72:
39:
37:
860:27 February
833:27 February
802:27 February
749:27 February
718:27 February
481:(TANSTAAFL)
451:Loss leader
446:Externality
349:Other goods
226:installed.
145:catchphrase
89:Development
950:Categories
924:2008-03-16
693:2008-03-16
660:13 January
621:2008-03-16
528:2008-08-01
496:References
374:açaí berry
281:jailbreaks
264:Activision
260:Atari 2600
52:consumable
50:, such as
638:Economist
582:August 1,
309:Microsoft
151:'s novel
881:Archived
546:Archived
418:See also
404:contract
381:sampling
359:Internet
317:Xbox 360
301:GameCube
297:Nintendo
277:modchips
208:Printers
172:Fujifilm
138:kerosene
83:Gillette
976:Pricing
241:Lexmark
106:patents
363:CueCat
321:eighth
219:patent
190:Issues
184:Instax
101:legend
687:(PDF)
680:(PDF)
576:Wired
388:Tying
325:ninth
256:Atari
167:Kodak
42:is a
862:2017
835:2017
804:2017
773:2017
751:2017
720:2017
662:2021
584:2008
440:Demo
323:and
315:and
307:and
305:Sony
293:Xbox
291:and
279:and
235:the
99:The
58:and
38:The
556:or
229:In
952::
897:.
821:.
790:.
737:.
653:.
636:,
601:^
573:.
504:^
247:.
140:.
81:,
927:.
864:.
837:.
806:.
775:.
753:.
722:.
696:.
664:.
624:.
586:.
531:.
195:(
27:.
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
