The Razor That Was Never Given Away
Business schools teach that Gillette gave away the handle and earned from the blades. The company's own price lists suggest the story arrived later than the strategy.
Popular accounts of the safety razor say that King Camp Gillette gave away the handle and made his fortune on the blades. The law professor Randal Picker, in an article in the University of Chicago Law Review, compared that story with the company's early catalogues. By late 1903 a Gillette razor set sold for $5 and came with twelve blades. The firm sold 51 razors in 1903 and about 91,000 in 1904.
Seen through patent law, the high price is easy to explain. The 1904 patents kept rivals from copying the design, and extra blades were sold at $1 for a dozen, a price the patents could defend. With competitors held off, the company had little reason to cheapen the handle.
Seen through patent law, the high price is easy to explain.
Seen through pricing theory, the strategy credited to Gillette would have called for a cheap handle and costly blades. Picker reports that the company did the opposite for years, keeping the handle price high, and moved toward a cheaper handle only around 1921, when it repackaged an older razor at a $1 list price as the patents ran out.
Seen through psychology, the later success of the firm may owe less to price than to habit, since a shaver who learns on one razor tends to keep buying its blades. Picker leaves open whether quality or habit explains the result, and none of the three views fully displaces the others.
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