#250 1921 · Gillette Safety Razor Company · Consumer goodsreframe
The company famous for inventing 'give away the razor, sell the blades' actually charged full price for both — until its patents ran out and forced its hand
the problem
A patent-protected monopoly has every reason to keep charging maximum price for its patented product, right up until the protection disappears
background
King Camp Gillette patented the disposable safety razor in 1904, and for the roughly seventeen years his patents held, Gillette Safety Razor Company charged a premium price for both the razor handle and the blades — the handle alone cost around $5 at launch, roughly a third of an average worker's weekly wage, and the 1913 Sears catalog carried an apologetic note that it legally could not discount Gillette's price due to the patent protection. This is the opposite of the strategy the company is famous for: Gillette held a genuine monopoly on a patented product and used it to charge as much as the market would bear on the handle itself, not to subsidize it.
The popular business legend — that Gillette deliberately sold razors cheap or free specifically to create a captive market for expensive blades — describes a strategy the company never actually used during the period it was best positioned to use it. When Gillette's original patents expired in the early 1920s, competitors could legally manufacture compatible blades and handles for the first time, ending Gillette's pricing monopoly.
the move
Facing new patent-free competition, Gillette dropped the price of its razor handles sharply to build a large installed base of handle owners, then earned its margin on the recurring blade purchases those owners kept making — the cheap-handle, expensive-blade structure now called the 'razor and blades model' emerged specifically as Gillette's competitive response to losing patent protection, not as the strategy that built the company's original dominance.
the payoff
The pricing model that resulted became one of the most widely copied business structures in modern consumer goods, later adopted explicitly by inkjet printer makers, video game console manufacturers, and coffee pod machine companies — even though, as legal scholar Randy Picker's research on the 'razors-and-blades myth' documents, the company most associated with inventing the model didn't use it during its patent-protected years, when it was best positioned to use it deliberately rather than defensively.
what came after
Gillette remained the dominant name in wet shaving for a century after adopting the model in the 1920s, holding roughly 70% of the US market as recently as 2010 before newer entrants eroded its share to around 50% by the mid-2020s — and the corrected version of its own origin story is now cited in business-strategy and legal-scholarship circles as a caution against attributing deliberate genius to what was, in Gillette's own case, an adaptation forced by patent expiration.
references
- [1]Razor and blades modelWikipedia, 2024en.wikipedia.org
- [2]The Razors-and-Blades Myth(s)University of Chicago Law Review (Randal C. Picker), 2011lawreview.uchicago.edu