It was King C. Gillette’s idea to “give the razors away but charge whatever traffic will bear for the blades.” This became known as the “razors and blades business model.”
While capital equipment providers cannot afford to give their systems away, their aftermarket business can be substantial. For established capital equipment companies, the installed base can produce 30 percent or more of revenue and profit. This very significant business deserves as much attention as the new-systems business. Complex capital equipment requires constant care and feeding. Throughout its life, it’s going to need service, parts, and upgrades. Nobody is in a better position to profit from this need than the original equipment manufacturer.