Razor Blade Business Model

The video explains the razor blade model, a sales strategy where a product is sold at a low cost or given for free to boost the sales of a related product with a higher profit margin. This model was first used by Gillette with their razors and blades, creating a need for customers to buy replacement blades. The model has been adopted by various industries, including Keurig, which sold coffee makers at a loss to promote the sale of their patented pods.

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