The Shaving Racket -- How Are Gillette and Schick Getting Away with Ripoff Razors?

By Scott Thill

The razor blade industry is swarming with impenetrably high-tech products and shockingly high prices -- accused of marking up prices 4,000-percent more than the cost of production -- making it an easy target for pop-cultural satire. Long before Clunesey's limp Reggie Perrin, "Fuck Everything, We're Doing Five Blades," an Onion headline lampooned in 2004, spoofing an industry whose answer to the question of increased market share equaled more blades. "We're standing around with our cocks in our hands, selling three blades and a strip," harrumphed a caricature of Gillette CEO James Kilts. "Moisture or no, suddenly we're the chumps. Well, fuck it. We're going to five blades."

Reality trailed behind comedy in 2005, when Gillette released the Fusion, a five-blade, battery-optional super-razor with a moisturizing strip whose residue evidently soothed your skin's post-traumatic stress disorder, or something. In Gillette's defense, it was just responding to market pressure. Schick released the four-blade Quattro in 2003, reacting to the new environment Gillette created when it released the three-blade Mach3 in 1998. That left Gillette CEO James Kilts no choice but to up the blade count, if it was going to win the war for the global grooming market share. The real-time profit war has been won by Gillette, whose increased blade count has allowed it to charge higher prices for comparatively low manufacturing costs of razor and blades sold.

But the banal truth is that there's a reason freebie marketing is also known the razors-and-blades model: Selling one product at a low price greatly gooses sales of a complementary product. It works just as well when it comes to printers and toner, or cell phones and network carriers. The concept is simple: Cheap product, expensive packaging, crafty marketing, and hefty profits when the customers have to replace the blades. In market analysis, parsing loaded terminology is paramount. Proctor & Gamble knows this because it once was nailed by a Connecticut judge for advertising that was "unsubstantiated and inaccurate," "greatly exaggerated" and "literally false."

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