Printer Manufacturers, Amazon Kindle and shaving companies often use "captive" pricing to make profits. How does it work?
Captive pricing is setting a price for something that must be used with the main product (i.e. razor blades, printer ink). Set high mark-ups on the supplies, but keep main product low. Amazon makes Kindles cheap so they make money off of people buying stuff on the Kindle, not with the actual technology. 77% of Keurig sales come from single serve cups, not the actual coffee maker. Two part pricing=Fixed fee (The Keurig)+Variable use fee (individual cups)
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Principles of Marketing
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