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Enrichment

How the razor introduced us to two-part pricing

Graham Watson

10th April 2017

Another excellent addition to the 50 Things That Made the Modern Economy series, as Tim Harford highlights the impact of the disposable razor on the modern economy. However, it's not so much the good that's of interest but the price model that Gillette adopted: two-part pricing.

Where the razor led, others have followed: the computer terminal - Sony loses money on the Xbox, but makes money on games sales; telecoms companies lose money on the handsets but gain money from the services that they provide. And it is this sort of thing that's truly innovative.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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