A Look At Two (opposing) Business Models

Design Walks

Comparing two successful business models: the razor and blade model, and Apple’s backward approach

The razor and blade modelSelling customers very cheap products below cost (sometimes for even free), and charge a lot more for any necessary add-ons to that product. This has been a widely accepted norm for businesses in the 21st century. This business model has its namesake from the business itself: selling razor blades. Razor handles are given away, and the company makes money from selling the blades.

Video game companies have been using this model for years: they sell the game consoles for less than the manufacture cost, but then proceed to charge very high price for the games. The whole PC (personal computer) ecosystem is also based on this model. Laptops and desktops were as cheap as you could make them, but then users would have to spend a lot on the Windows operating…

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