Traditionally, 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
- 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.