Razor and blade means selling a base product cheaply and earning on the consumables it needs. Printers and ink cartridges, coffee machines and capsules, game consoles and games. The first purchase is priced to remove hesitation; the profit arrives over years of repeat purchases that only work with your device.
Nespresso is the best-known version: the machine is affordable, the capsules are not. Follow the money over time, not at the moment of sale.
An example: you sell a machine for 79 euros that costs 95 euros to produce and ship, so each sale starts with a 16 euro loss. An average customer buys 300 capsules a year at 0.40 euros, which is 120 euros of revenue, and your margin on capsules is 60 percent, so 72 euros a year. The initial loss is recovered after about three months of normal use. Over five years the same customer contributes 360 euros of capsule margin against that one-time 16 euros.
Two conditions have to hold. First, the consumable must be tied to the device, through a patent, a proprietary format, a chip, or a service contract. Without that tie, competitors sell compatible refills at half your price and you have subsidised hardware for someone else's business. Patents expire, and margins on the consumable drop quickly afterwards, so plan for that date.
Second, you need capital. You pay for the subsidised hardware immediately and earn it back over months. If you sell 5,000 machines at a 16 euro loss each, that is 80,000 euros of cash out before the repeat revenue starts. Fast growth makes this worse, not better.
Founders also underestimate how price-sensitive customers become on the consumable. People compare the price per cup, not per pack, and refill competitors advertise exactly that. Watch the price per unit of use.
The pattern is one of the business model options evaluated against an idea, so it can appear in a generated plan whenever a product needs refills, replacement parts or renewals.
