We are asked to think of Razor and Blade Pricing Strategy as
“Give the razors (handles) away for free. Get a large enough customer base. Charge for blades”
Take look at the pricing for the “Perfect Pencil” and its refills.
We see a far too expensive razor, so to speak, priced at $425 and comparatively far cheaper 3-pack blades for $25.
What is going on? Don’t these pencil marketers know the razor and blade strategy? Shouldn’t they be giving away the Perfect Pencil with its Sterling Silver set cheap (or even free) and make money from selling pencils?
Engrave your answer on the Sterling Silver cap of the Perfect Pencil and send to me.
- Think about the customers they are targeting.
- Why those customers will buy the Perfect Pencil?
- What is the perceived value of $425 Pencil set?
- Why will any of these customers buy refills?
- What is the perceived value of refill to these customers?
- What is the value signal component – the razor or the blade – the pencil holder or the pencil?
For extra credit – Why does the refill cost $25?
Think about the price anchor set by $425.