Home security systems are sold for less than cost. The installation is almost always free as well. In order to get this deal one must sign a multi year monitoring contract. Locally that cost is 25.00 to 35.00 a month. This is a binding contract.
A friend of mine had a monitoring contract like this. Her house burned to the ground. She still had a bit more than a year on her monitoring contract and had to continue payments even though the equipment burned along with everything else and she did not rebuild at that site.
Urban legend about the Model T: Henry Ford lost money on every one he sold, but made it back on service parts. One statement was that common parts, like bolts, were deliberately made slightly different so that they HAD to be purchased from Ford. Of course, if the price were really that much higher, the aftermarket would have moved in, see any 1920’s Sears catalog for the Model T section. (And then there were people who didn’t understand the price difference between buying parts one at a time (for service) and buying them in regular large quantities for production.)
Chinese restaurant suppliers will print out your menus for free, put up signage and decorations and provide all of the cutlery and tableware as well as provide recipes and train your cooks as long as you buy all of your supplies through them. It was a major factor in the spread of Chinese restaurants through small town America.
Interesting. I knew a man in a similar business back in the 50s when most drug stores had soda fountains and five and dimes had lunch counters. He would rent hot dog rotisseries to these places very cheaply, but his real business was selling hot dogs. He had a circuit of maybe 50 machines that he visited on a regular basis. But even that, while quite profitable, wasn’t his real business. His real business was developing routes and selling them. On at least one occasion, the guy who bought it ran it into the ground. He bought it back for much less than he had sold it for, redeveloped it and then sold it back to the same guy, but not before he had the accompany him on his rounds to see how to operate such a business.
I used to work for a company that manufactured catering equipment and we sold a lot to Chinese and other restaurants around the country.
I noticed that we had a disproportionately high share in one particular region and asked why that was. It turned out that a wealthy guy from Hong Kong had settled there and started a business helping people (mostly ex Hong Kongers) to start up a business. He provided finance at a low cost, but part of the deal was a whole package of equipment from napkins to cooking ranges - all good quality and much was specific to their requirements. He tied them into a contract that left them unable to look elsewhere.
At the same time, there was a boom in KFC franchises. We made stainless steel (expensive) machine that was ideal for shredding cabbage and making their special coatings. Every franchise had to have one.
Although it’s not quite the same, IBM famously never sold their mainframe machines outright, they only leased them so they guaranteed themselves a continuing revenue stream (Decca did the same with the Decca Navigator, until the patents ran out).
Less so now that smartphones are ubiquitous and so expensive, but cell phones and plans: you used to basically get the cell phone for free or for very little, but they made up for it in the (mandatory) monthly service charges.
A lot of software is going the way of “software as a service”. Little to no up-front cost, but an ongoing and never-ending monthly fee which results in your spending much more, overall, than you used to (our password software tried going that route; I managed to find a way to do a one-time license but they did not make it easy).
Home cleaning services that use “independent contractors” instead of employees, and these unfortunate people have to purchase the clearing products from the company - at high markup.
To me the razor blade model is different. It means using the promise of technology and innovation to add a very marginal new feature, claim it is masterful, increase prices and beat competitors.
So we added a third blade. Maybe it’s useful? The first blade gently whispers to the skin. The second gently lifts the hair. The third lovingly trims it.
But the you need a fourth blade. Now the first blade just suggests foreplay. Then a fifth blade. Now the first blade suggests a nice bottle of wine to the hair to get into the mood. Then a blade on the other side - since apparently one blade is often better than five blades. Then a battery and light for gentle vibration. Then a crystal - because crystals are nice, heal scrofula and commune with the meridians. Maybe an aboriginal power symbol could be carved in the handle next?
Or you could just buy WordPerfect 172 - which now has an additional font and can smell the rain.
Strangely, some building fire alarm systems manufacturers had this model. In the “old days,” most smoke alarms, manual pull stations, heat detectors, and waterflow devices were compatible with virtually all fire alarm control equipment. Recent addressable device systems are not. Acme devices are not compatible with Apex control units.
Because of this, major manufacturers would basically give away the system components to electrical contractors. The electrical contractors do all the installation work and then the local manufacturer’s personnel would program and commission the system. The manufacturer knew that the building owner would HAVE to use them for spare parts, reprogramming, maintenance, inspection, testing, etc.
It’s not been quite so bad in the last few years, but it is still a big problem.