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Razor-Razorblade Model
(redirected from Razor/Razorblade Model)

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Razor-Razorblade Model
A way to price two goods dependent on the other in which one good is priced at a loss while the other has a large mark-up. The idea is to encourage consumers to buy one product for the lesser price, necessitating them to buy the other at a higher price in order to use the first product. The model takes its name from the fact that razors are very cheap, while the replacement blades are often quite expensive. The model is commonly used with video game consoles and the games themselves.
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Severson continued, "We are also very pleased that our razor/razorblade model continues to deliver outstanding results; 72% of our quarterly revenues are recurring and we believe that there is still headroom to drive this percentage higher in the coming years.
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Using a razor/razorblade model, the company is able to effectively use reagent price increases to grow.
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