CFA Level I · CFA Level I Exam · Business Models
A company sells printers at a low price, near cost, and earns most of its profit from proprietary ink cartridges that customers must keep buying. The company's business model is most likely:
The company most likely uses a razor and blade model. It prices the printer low to win customers, then earns most profit from the proprietary cartridges that customers must keep buying. A subscription charges recurring access fees, and a marketplace earns commissions from matching buyers and sellers.
- Aa subscription model
- Ba razor and blade modelCorrect
- Ca marketplace model
Explanation
Selling the base product cheaply and earning profit on repeat purchases of a required complementary consumable is the razor and blade model. A subscription charges recurring fees for access, and a marketplace earns fees by connecting buyers and sellers.
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