Why are Gillette and Schick cartridge blades so expensive ?

[DirtyDave]

Question :

How does the DE blade market exist at all now ?

In my American city a double edged razor is impossible to find , the blades almost as hard to find , and the blades which are available are generic brands rather than quality blades like Derby , Feather, Sharp , Astra, etc.

Is the international market outside the USA the main market for DE
shaving ?
If yes , which countries ?

In USA , it seems relatively few people under the age of 60 are even aware of DE shaving and those who are think of it as unsafe because the equipment is largely unavailable on store shelves. They think of a "safety razor" as one which uses a disposable plastic cartridge and doesn't have exposed blade edges.

In general, the DE's seem to be popular in countries not considered first world, I have read. Easier and cheaper to make. I don't think patents still apply to them, but I dont' know that for sure.

I have also read that as countries become more affluent, the preference for cartridge blades grows.

 

[mmack66]

DE Razors and blades haven't been made in the US for 25 years and most folks today either don't even know they are still available or that they even ever existed at all.

Gillette has about 75% of the razor market so they really don't have any competition.

People tend to believe that the latest things are always better.

 

[Absolute Mustard]

While it may be true that the Gillette plant contains fantastic engineering feats, it is certainly not true that that's the main reason the carts are expensive. In point of fact they cost pennies to produce.

Pennies to produce once created, but the marketing and full scale revamping of a product every 2 years is costly. Very costly. The cost has to be paid by someone.

The cost of producing a car is very small compared to the price you pay. Why is that?

If Gillette or the car company produced the same product/car every year for 30 years then the price would come down a LOT

 

[mandoman]

your paying for the engineering even though it sucks

 

[Drubbing]

Question :

How does the DE blade market exist at all now ?

Because just like the average consumer who only buys what TV sells, you have to look beoynd your own world. There is a market outside the USA and other advanced ecomnomies, and it contains a couple of billion people.

 

[Drybonz]

Because the purpose of Gillette and Schick is to make a profit, and as long as people are willing to pay the going price for the blades they will keep selling them at the highest price possible to maximize their profit.

That's really all that needs to be said. The reason cartridges even exist is so that they can sell us a product that we consume very rapidly and repeat buy. The point is that they found a better way to make money, and people need to shave and need the product, and they pay the going price.

The reverse concept is the reason the Personna 74's were only around a couple years. The product was too good and people weren't consuming it fast enough.

 

[boctok]

Marketing technique made famous by Gillette. Sell the razor cheap; at a one time loss. The consumer must rely on the blades time and again so they are sold at higher profit for many years to follow. This began with the first DE razor. Look up "loss leader".

 

[oversaturn]

This is an article taken from an English newspaper:

Sharp practice? The razor heads that cost just 5p to make, but sell for £2.43 each

Men are paying over the odds for a clean shave because of a huge mark-up on razor heads.

The products sold by Gillette and other companies cost as little as 5p to make, industry insiders have revealed.

But consumers are charged up to £2.43 a piece - a mark-up of more than 4,750 per cent.

The price of shaving products at leading supermarkets is under investigation by the Office of Fair Trading.

The Government watchdog is involved in a long-running inquiry into alleged collusion between manufacturers and retailers.

It is alleged that salesmen from Procter & Gamble, which bought Gillette for $57billion (£35billion) in 2005, urged retailers not to cut the shop price of its brands.

A check of Tesco, Asda and Sainsbury's found the UK's three biggest supermarkets are selling Gillette's Fusion Power cartridges at the same price.

A pack of eight costs £18.53, and the replacement razor heads are so expensive that they are now the most shoplifted product in the High Street.

Special security measures have been introduced, including sealing the packs in boxes with an electronic tag which sets off an alarm if it is not removed before leaving the store, and CCTV that activates if the product is removed from the shelf.

A pack of four Fusion Power cartridges costs only 20p to manufacture, plus 8p for packaging. But they are sold for £9.72 - £9.44.

An industry insider said Gillette takes the lion share - £6.28 - to cover its operating costs and make a profit. Some £1.90 goes to the retailer and £1.26 to the Government in VAT.

The insider said: 'I know as a matter of fact that it will not cost more than 5p to produce a refill cartridge, it is a question of pennies given the bulk involved, yet Gillette is charging a wholesale price which is much higher.

'The figures tell you why it can afford to use stars such as Tiger Woods on its payroll (for advertising) and how it could afford to give David Beckham a diamond-encrusted mach3 razor for Father's Day some years back costing $54,000.

'With the Gillette products, the company is so dominant that it is able to spell out the terms of sale, including the price they want to see, to retailers.'

As well as Beckham and Woods, Gillette has splashed out large amounts of money on tennis star Roger Federer and footballer Thierry Henry to help market its products.

A recent Which? survey praised Gillette's products but gave a 'Best Buy' rating to the King of Shaves Azor. Its four cartridge refill pack comes in at a much cheaper £4.88.

Tesco's Matrix system, which has a triple blade head, has also won plaudits. A four cartridge refill costs only £2.20. A spokesman for Procter & Gamble said the retailers, rather than manufacturers, set the price paid by customers.

She said: 'Delivering value to our consumers is critical to our business. 'P&G determines the (wholesale) prices at which we sell to customers primarily based on covering our costs - the cost of product development, raw materials, processing, packaging, transport, general-expenses and marketing.'

She said that the company also needed to earn 'a sufficient return to sustain our business' and argued that its products provide good value in terms of performance in relation to price.

She said the company was unable to comment on the OFT investigation, but added: 'Our policy is to comply with the letter and spirit of the law everywhere we do business'.

Why are the Gillette razors and blades so expensive? Because somebody has to pay Tiger Woods, Federer and Henry!!

Read more: http://www.dailymail.co.uk/news/art...ust-5p-make-sell-2-43-each.html#ixzz15RfGujH5

 

[neilt]

Elasticity of Demand due to brainless consumers allows the company to charge the premiums for this product. Read below.

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

In all honesty, the carts manufacturing cost is very close to a de blade. Most of the costs are going to be fixed plant costs + transportation of goods to market. Materials costs are going to be a few pennies difference per consumer unit. Marketing costs...well...

Another interesting thing to read on is how VAT taxes effect inflation. Look at PPP and Vat Taxes and value of underlying currency vs just 'do products cost more because of VAT".

In short, DE better, cheaper, taxed less, marketed less, and just cooler.

 

[kingfisher]

Pennies to produce once created, but the marketing and full scale revamping of a product every 2 years is costly. Very costly. The cost has to be paid by someone.

The cost of producing a car is very small compared to the price you pay. Why is that?

If Gillette or the car company produced the same product/car every year for 30 years then the price would come down a LOT

Revamping of the product costs a lot of money, for sure. They spent a fortune on engineers for the actual handle/cartridge design. The major switch came between the Sensor and the Mach3, as the entire idea of how the cartridge maintains contact with the face was changed. The amount of money they spent on that little piece of engineering (leaving aside the machinery they use to make the cartridges) was astronomical.

Why it should cost that much money to move from the Mach3 to the Fusion, on the other hand, is somewhat mysterious. The fundamental design didn't change at all. Obviously, new tooling had to be made so the cartridge production could be properly automated.

They also spend a boatload of money on marketing/advertising. However, I'm inclined to believe that they would cut back on their marketing if it weren't enhancing their bottom line.

The profit margin on their cartridges paid for the fancy engineering at their plant a long time ago, undoubtedly. I wonder how much their CEO makes?

 

[Go West Young Man]

Marketing technique made famous by Gillette. Sell the razor cheap; at a one time loss. The consumer must rely on the blades time and again so they are sold at higher profit for many years to follow. This began with the first DE razor. Look up "loss leader".

Just being a little pedantic, but when King Gillette was involved in the company, they sold razors at a profit as well. It was only after he left that the new cheap razor/expensive blades model was developed.

 

[mmack66]

Just being a little pedantic, but when King Gillette was involved in the company, they sold razors at a profit as well. It was only after he left that the new cheap razor/expensive blades model was developed.

+1. Some of those early razors were quite expensive.

 

[djh]

Why are plastic cartridge blades so expensive compared to double edge razor blades ?

For instance two cutting edges are present on a double edged blade and also in a two blade plastic cartridge, but the double edged blade often is far less than half the price of the plastic cartridge blade. A popular double edged Derby blade is far less than one fifth the price of most two blade plastic cartridges.

A high price for a five blade plastic cartridge would be understandable compared to a double edged blade.

With Gillette and Schick competing for the plastic cartridge market , prices should be naturally falling to grab market share but are not.

Are plastic cartridges expensive to produce compared to a double edged blade ? Why such a wide difference in price ?

They have the market by the short hairs and are simply using their massive advertising budgets to convince people that there is no alternative way to shave. Once you are in this position, you can charge whatever you please.

 

[Ignatius]

Another point that isn't often mentioned in these sort of threads is that the alternatives that ARE widely available are properly rubbish. I'm talking about the UK specifically here, but it likely applies similarly elsewhere. Try one of the supermarkets own brand cartridges or disposables to understand the appeal of the M3. The two big names have got the market cornered and they fix prices as they like. Most people aren't idiots because they don't know you can get a Merkur from the internet and save a load of money; we all pay over the odds for everyday stuff when some effort would save us a bundle. Its just that we are geeks so realise more clearly how it works with shaving stuff.

 

[Mike Schutz]

Keep buying those Gillette Carts. The more profits P&G makes the better the dividends on my stock.

Personally, I wouldn't touch this stuff with a ten foot pole. If the consumer really wanted a good product and refused to buy the mass marketed mediocricy that they are a soft touch for every day, we would have high quality available locally at a good price. But from razor blades to cars and appliances, tools and on and on, too many of us settle for second best or worse.

 

[itb76]

I guess I have two answers.

1. The best selling beer is absolute swill, yet it costs relatively little to produce. Years ago they figured out to cut it with rice to reduce the cost, then convince the public that the "lighter" flavor and color are benefits, not deficiencies. Pure marketing. Marketing drives sales, but you have to pay for the marketing.

2. Most guys will pay for something that can reduce the time needed to shave. A cartridge maintains the correct blade angle at all times, something I have yet to learn after 18 months of wet shaving. A lot of guys find value in this time savings, and may not notice the shave is less than perfect. A Gillette gives you a better shave than the store brand cartridge after all.

The cost of producing a car is very small compared to the price you pay. Why is that?

Despite the car manufacturers CONSTANTLY beating up their suppliers for cost concessions (yes I work for an automotive supplier), the cost to manufacture an automobile is quite high. It can be argued that some of those costs are unnecessary (labor, regulation, etc.), but they exist. Profit margins of the automakers are comparatively low, certainly nothing close to Gillette! Maintaining a design for 30 years will not sell many cars, and these days is technically impossible because of ever changing regulations.

 

[bogey97]

It's all about supply and demand. The price that a particular item sells for actually has very little to do with how much it costs to produce it. It is all about what price the market will bear. If there are enough people out there willing to pay $5 for a cartridge with 6 blades, then that is what they will charge. If consumers don't think that's worth their money, they will seek out cheaper alternatives, such as the drugstore generic razors, or DE razors, or even not shaving at all.

Price collusion is actually very difficult with a commodity such as a razor -- there are far too many producers out there to compete.

 

[Kirby]

Say what you will about gillette as a whole, but I've really been enjoying the 7 o'clock series of DE blades!

 

[TMH478]

This is an article taken from an English newspaper:



Why are the Gillette razors and blades so expensive? Because somebody has to pay Tiger Woods, Federer and Henry!!

Read more: http://www.dailymail.co.uk/news/art...ust-5p-make-sell-2-43-each.html#ixzz15RfGujH5

And they dumped Tiger, so they are now saving money!! Pass the savings on, I say!

 

[Bass301]

I am trying to reconcile these two replies :

(1) One reply said Gillette has little if any competition because it has about 75 percent of the market.

(2) Another reply said "price collusion is actually very difficult with a commodity such as a razor -- there are far too many producers out there to compete."