free as a business Model patterns 105 The form of the bait & hook pattern known as the razor and blades model derives from the way the fi rst disposable razors were sold. In 1904 King C. Gillette, who commercialized the fi rst disposable razor blade system, decided to sell razor handles at a steep discount or even give them away with other products in order to create demand for his disposable blades. Today Gillette is still the preeminent brand in shaving products. The key to this model is the close link between the inexpensive or free initial product and the follow-up item—usually disposable—on which the company earns a high margin. Con- trolling the “lock-in” is crucial to this pattern’s success. Through blocking patents, Gillette ensured that competitors couldn’t offer cheaper blades for the Gillette razor handles. In fact, today razors are among the world’s most heavily patented consumer products, with more than 1,000 patents covering everything from lubricat- ing strips to cartridge-loading systems. This pattern is popular in the business world and has been applied in many sectors, includ- ing inkjet printers. Manufacturers such as HP, Epson, and Canon typically sell printers at very low prices, but they generate healthy margins on subsequent sales of ink cartridges. manufacturers retailers marketing r&d logistics razor handle blades built-in "lock-in" customers brand patents retail marketing manufacturing logistics, r&d 1 x handle purchase frequent blade replacements Razor & Blades : Gillette VP CR CH CS KP KA KR R$ C$ 1 x handle purchase 1 x handle purchase frequent blade replacements customers customers 1 x handle purchase frequent blade replacements bmgen_final.indd 105 6/15/10 5:38 PM