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Consumable Business Model

Consumale ProductsTraditionally, businesses concentrating on selling a product or service. The money was made at the point of the initial sale. All the focus was on making the product or service stand out based on quality, convenience, easy of use, cost, or a host of other characteristics.

Eventually savvy entrepreneurs learned about the up sell or add on.

For the past few years I’ve noticed a different model. Rather than the business hinging on the initial sale, it thrived on the repeat customers buying consumable supplies.

The first time I encountered this — without ever recognizing it — was with my sister’s Easy-Bake Oven. I don’t know how much the oven cost, but I’m positive the cost of those dozens and dozens of itty bitty bags of flour and sugar had an enormous profit margin — and brought in many, many times the cost of the oven itself.

The first time I really paid attention to the model was with printer ink. Personal computer printers – that once carried a hefty price tag — were being given away…free! I couldn’t believe it and wondered what the catch was. The catch, as it turned out, was that the money wasn’t in the printer, it was in the ink cartridges. Some companies have an entire business built on offering replaceable ink cartridges, because once  you have a printer, you are almost guaranteed to buy ink to make it useful.

Some other examples are:

  • vacuum bags
  • snow cone flavorings
  • razor blades
  • pen cartridges
  • bullets
  • soda flavoring
  • coffee brew packs
  • weed whacker string
  • windshield wipers
  • craft machine software
  • cleaning product replacement heads
  • cell phone service contracts

If you’re an entrepreneur, consider how this model might work for you. Is there something you can sell that will bring long-term repeat business with a consumable component?

Sometimes being successful in business is achieved by stepping back from from our concentrated work to see the bigger picture. From that viewpoint we can often see more possibilities than we ever imagined.

{ 3 comments… add one }
  • Nancy May 20, 2012, 1:26 am

    In business every individual tend to follow a different strategy and you seem to be no different…. Keep up the good work my friend…

    Thanks
    Nancy recently posted…Xbox 360 HDMI Cable: The CapabilitiesMy Profile

  • FFC July 7, 2012, 12:43 am

    You are seeing business in a different point of view. I think what you have observed in today’s business is that the consumable business model is a wise business move as it makes the customers buy their products continuously. What would be the use of the printer if it has no ink, right? Thanks for posting this article, I definitely learned something from it.

  • BF April 27, 2013, 8:47 am

    You hit the nail on the head with this article! Did you know that printer ink is more expensive per ounce than champagne, Chanel No. 5 parfum, and oil! Your best bet is to find an older black and white laser printer and buy remanufactured toner cartridges. That’s the most economical way to print at home.

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