The Razor and The Blade(s)

September 24, 2010

If you’ve spent even two minutes in business school (or just one minute around business school majors), you have heard the famous tale of how Gillette invented a whole new marketing and business strategy by pricing its razor handles cheaply and then selling their customers a lifetime of blades at a premium.

Well, that might just be a business myth:

From 1904 through 1921, Gillette could have played razors-and-blades — low-price or free handles and expensive blades — but didn’t. Instead, Gillette set a high price for its handle and fought to maintain those high prices during the life of the patents. The firm understood to have invented razors-and-blades as a business strategy did not play that strategy at the point that it was best situated to do so.

Interesting research by Randy Picker for the Harvard Business Review’s Blog The Conversation.