There's something every man must go through to become an adult: finding the right shaving method for himself.

My first razor was my dad's electric shaver. It was convenient for dry shaving and saved time, but it was hard to get a close shave, so I'd often be stubbly again in less than half a day.

My next choice was a Gillette razor. At the time, a set including the razor and blades was cheaper than buying just the blades, so I thought, "Not bad!" and happily bought it. The blade razor was much lighter than the electric one, providing a clean shave along my jawline. I also liked the refreshing experience of wet shaving, so I quickly settled on Gillette.

The razor-and-blade strategy is a business model first conceived by Gillette. It's about selling the razor cheaply (or even giving it away for free) and making a profit from the blades. ¹ I was locked into Gillette as a child and still use it today. Living in the platform era, this strategy feels so intuitive that I've always taken it for granted, like a proverb. I thought, "Sell consumables expensively, and devices cheaply."

But is that really true? Anyone can sell consumables at a high price, so why would you have to buy a Gillette razor?

In fact, Gillette didn't sell razors cheaply from the start. Instead, they positioned them as premium products, targeting customers with purchasing power. Think of them as small luxury goods, like today's AirPods Pro.

Before Gillette, many people used straight razors, like those found in barbershops, which had to be sharpened on leather or a whetstone. Then, in 1895, the Star Safety Razor was released, similar to today's razors. It featured a metal holder that secured the blade to keep hands cleaner and a lather catcher to collect foam and whiskers. However, customers still had to strop and hone the blade themselves.

* The body cost $1.50, spare blades $1, a stropping machine $1.75, and a leather strop 40 cents. This meant the product was designed with the premise that you'd sharpen the blades at home to make them last longer.

In October 1903, Gillette launched its thin, replaceable razor blade product. A set consisting of a razor and 12 double-edged blades cost $5. This was about one-third of the average industrial weekly wage at the time. Considering representative consumer goods like men's suits at $12 and women's tailored suits at $12.50, it was a very high price. It was also more than three times more expensive than its competitor, the Star Safety Razor, which cost $1.50.

This premium pricing strategy was possible due to the patent on replaceable blades and an innovation in customer experience. Gillette's slogan at the time was "No Stropping, No Honing," which loosely translates to "Don't sharpen; just replace." Customers no longer needed to sharpen their razor blades. Gillette maintained its high-price positioning for razor products until the patent expired, enjoying the market and generating immense profits.

However, a monopoly market can't last forever. When the patent expired in 1921, competitors began to enter. Gillette's pricing strategy then shifted to a dual-pricing approach. While new models maintained the premium price of $5, older models were repackaged (as the Brownie) and their price was lowered to $1. This expanded device penetration and defended against competitors.

Furthermore, Gillette maximized the lock-in effect by tying consumables to the device through marketing campaigns that emphasized Gillette blades were only compatible with Gillette razors. This encouraged consumers to repeatedly purchase blades. From this point on, brand power and entrenched customer experience became Gillette's strong competitive advantages, and Gillette's sales began to rise sharply.

Companies must always seize market timing. If they don't move nimbly, they'll be left behind—neither too early nor too late. Moreover, to enhance brand trust, they must constantly communicate with customers in language they understand and continuously evolve product features to innovate and maintain customer experience. The razor-and-blade strategy was the result of intense deliberation by a leading company, striving for survival amidst changing market environments and competitive landscapes.

Picker, Randal C., The Razors-and-Blades Myth(s) Archived 2017-06-22 at the Wayback Machine (September 13, 2010). U of Chicago Law & Economics, Olin Working Paper No. 532. Available at SSRN: ↩