University of Chicago Law School Chicago Unbound Journal Articles Faculty Scholarship 2011 The Razors-and-Blades Myth(s) Randal C. Picker Follow this and additional works at: https://chicagounbound.uchicago.edu/journal_articles Part of the Law Commons Recommended Citation Randal C. Picker, "The Razors-and-Blades Myth(s)," 78 University of Chicago Law Review 225 (2011). This Article is brought to you for free and open access by the Faculty Scholarship at Chicago Unbound. It has been accepted for inclusion in Journal Articles by an authorized administrator of Chicago Unbound. For more information, please contact
[email protected]. The Razors-and-Blades Myth(s) Randal C. Pickert The razors-and-bladesstory offers a foundationalunderstanding of a key area of economics and strategy: invest in an installed base by selling the razor handles at low prices or even giving them away, then sell the razor blades at high prices to justify the prior investment. Large chunks of modern technological life-from VCRs and DVD players to video game systems like the Xbox and now e-book readers-seem to operate subject to the same dynamics of razors-and-blades. The actual history of razors-and-bladesis much richer than the standard story suggests. At the point that Gillette could most readily have played the strategy-from 1904 to 1921, during the period of the initialpatents-it did not do so. The firm under- stood to have invented razors-and-bladesas a business strategy did not play that strat- egy at the point that it was best situated to do so.