I think Gillette is on to us

[Mougrim]

One indicator of how much they charged was that the competition wedge safety SE wedge razors were selling for $1.50 with wedge blade. But Gillette asked a whopping five bucks.

Which is today amounts to about 150 bucks, if I'm not mistaken.

 

[mrb7]

The CPI calculator I found on google adjusts $5 in 1915 to be $117 in 2016.

Makes the Merkurs look like a bargain.

 

[Face&Head]

https://hbr.org/2010/09/gillettes-strange-history-with
From 1904 through 1921, Gillette could have played razors-and-blades — low-price or free handles and expensive blades — but didn’t. Instead, Gillette set a high price for its handle and fought to maintain those high prices during the life of the patents. The firm understood to have invented razors-and-blades as a business strategy did not play that strategy at the point that it was best situated to do so.

Those early years, starting over a century ago are known as the "Patent Years", during which time Gillette maintained a high price for the razors but quickly changed strategies as the patents were about to expire. Most companies lose market share and profits when they loose patent protection, but Gillette's profits jumped when their business model changed with the razor price dropping from $5.00 to $0.85-including 3 blades that would normally sell for $0.30. The number of razors sold went from ~2 million in 1920 to 15 million in 1925 and their earnings rose by 20X. It became clear that blade sales were tied to the installed base. In the period immediately following the patent expiration, there was a war between blade formats, which ended when Gillette acquired their major competitor, Auto Strop in 1930. In 1922 they started razor "give-aways" in a promotion with Wrigley Gum. But by 1930 the company was headed toward failure; when Auto Strop, a much smaller competitor led by inventor Henry Gaisman, that had wedded patent and trademark law in an effort to lock-in the blade aftermarket for its razor handles and introduced a new blade and blade format that was backwards compatible with the existing stock of Gillette razors. Gillette responded by introducing a new razor, a new blade, a new blade format and a new top price of $1. But, as the new razor blades themselves made painfully clear—“patents pending”—Gillette had not secured its patent position at the time of the launch, and Gillette immediately found itself on the defensive when Auto Strop filed a patent infringement action alleging that the new razors and blades violated Auto Strop’s patents. By the end of 1930, Gillette and Auto Strop merged in a shotgun marriage designed to settle the patent litigation, but the Gillette board of directors—and patent portfolio—was remade. The Gillette insiders were swept from the executive committee of the board, and by the end, only one was on the executive committee, Auto Strop's Henry Gaisman. The story here is that the expensive razor model failed to capitalize on their intellectual property and when they were forced to meet the competition following the patent expirations, they went on to market share dominance and high profitability. (Full disclosure: I'm a financial analyst who covered Gillette for more than 20-years until their acquisition by P&G in 2005. I've communicated with Randal Picker, who authored the HBS linked paper, which was originally published at the University of Chicago's Law School and I cribbed some of the history above from his notes. There is much more to this history and the benefits they achieved working with the military during both World Wars)

 

[ackvil]

Those early years, starting over a century ago are known as the "Patent Years", during which time Gillette maintained a high price for the razors but quickly changed strategies as the patents were about to expire. Most companies lose market share and profits when they loose patent protection, but Gillette's profits jumped when their business model changed with the razor price dropping from $5.00 to $0.85-including 3 blades that would normally sell for $0.30. The number of razors sold went from ~2 million in 1920 to 15 million in 1925 and their earnings rose by 20X. It became clear that blade sales were tied to the installed base. In the period immediately following the patent expiration, there was a war between blade formats, which ended when Gillette acquired their major competitor, Auto Strop in 1930. In 1922 they started razor "give-aways" in a promotion with Wrigley Gum. But by 1930 the company was headed toward failure; when Auto Strop, a much smaller competitor led by inventor Henry Gaisman, that had wedded patent and trademark law in an effort to lock-in the blade aftermarket for its razor handles and introduced a new blade and blade format that was backwards compatible with the existing stock of Gillette razors. Gillette responded by introducing a new razor, a new blade, a new blade format and a new top price of $1. But, as the new razor blades themselves made painfully clear—“patents pending”—Gillette had not secured its patent position at the time of the launch, and Gillette immediately found itself on the defensive when Auto Strop filed a patent infringement action alleging that the new razors and blades violated Auto Strop’s patents. By the end of 1930, Gillette and Auto Strop merged in a shotgun marriage designed to settle the patent litigation, but the Gillette board of directors—and patent portfolio—was remade. The Gillette insiders were swept from the executive committee of the board, and by the end, only one was on the executive committee, Auto Strop's Henry Gaisman. The story here is that the expensive razor model failed to capitalize on their intellectual property and when they were forced to meet the competition following the patent expirations, they went on to market share dominance and high profitability. (Full disclosure: I'm a financial analyst who covered Gillette for more than 20-years until their acquisition by P&G in 2005. I've communicated with Randal Picker, who authored the HBS linked paper, which was originally published at the University of Chicago's Law School and I cribbed some of the history above from his notes. There is much more to this history and the benefits they achieved working with the military during both World Wars)

Nice analysis.

 

[coase]

The CPI calculator I found on google adjusts $5 in 1915 to be $117 in 2016.

Makes the Merkurs look like a bargain.

The CPI calculator ignores changes in income. So that would be $117 for a time when people's inflation adjusted salaries were substantially lower than today.

The "Measuring Worth" calculator gives you alternate ways of getting an idea of the value of a dollar then vs. today.

https://www.measuringworth.com/ppowerus/

 

[Feather-man]

The CPI calculator ignores changes in income. So that would be $117 for a time when people's inflation adjusted salaries were substantially lower than today.

The "Measuring Worth" calculator gives you alternate ways of getting an idea of the value of a dollar then vs. today.

https://www.measuringworth.com/ppowerus/

Thanks for this!

 

[Face&Head]

The CPI calculator ignores changes in income. So that would be $117 for a time when people's inflation adjusted salaries were substantially lower than today.The "Measuring Worth" calculator gives you alternate ways of getting an idea of the value of a dollar then vs. today.

Yes, it was about 1/3 of a working-man's weekly wage. It should also be noted that blades sold for $0.083 (1915), which is ~$1.96 in today's dollars. A decent straight could be purchased for $0.60 to $1.00 at the time and a really high-end German Blade with fancy scales for ~$3.00. Many users stropped these blades or returned them to Gillette for sharpening. During the patent years their razor pricing strategy suppressed the growth of their installed base and absent WWI they might have failed. At one point after the patent expiration, they were selling the razor with 3 blades for $0.85 (a 83% discount from the $5.00 razor) and that was when volume and profits took off but they had squandered 17 years of patent protection before that and were left in a vulnerable position.

 

[mrb7]

The CPI calculator ignores changes in income. So that would be $117 for a time when people's inflation adjusted salaries were substantially lower than today.

The "Measuring Worth" calculator gives you alternate ways of getting an idea of the value of a dollar then vs. today.

https://www.measuringworth.com/ppowerus/

This great. Thanks.

I always knew CPI was only a rough indicator. But never knew how to get a better one.

Now I can argue my way all over the internet!!

 

[alex2363]

Those early years, starting over a century ago are known as the "Patent Years", during which time Gillette maintained a high price for the razors but quickly changed strategies as the patents were about to expire. Most companies lose market share and profits when they loose patent protection, but Gillette's profits jumped when their business model changed with the razor price dropping from $5.00 to $0.85-including 3 blades that would normally sell for $0.30. The number of razors sold went from ~2 million in 1920 to 15 million in 1925 and their earnings rose by 20X. It became clear that blade sales were tied to the installed base. In the period immediately following the patent expiration, there was a war between blade formats, which ended when Gillette acquired their major competitor, Auto Strop in 1930. In 1922 they started razor "give-aways" in a promotion with Wrigley Gum. But by 1930 the company was headed toward failure; when Auto Strop, a much smaller competitor led by inventor Henry Gaisman, that had wedded patent and trademark law in an effort to lock-in the blade aftermarket for its razor handles and introduced a new blade and blade format that was backwards compatible with the existing stock of Gillette razors. Gillette responded by introducing a new razor, a new blade, a new blade format and a new top price of $1. But, as the new razor blades themselves made painfully clear—“patents pending”—Gillette had not secured its patent position at the time of the launch, and Gillette immediately found itself on the defensive when Auto Strop filed a patent infringement action alleging that the new razors and blades violated Auto Strop’s patents. By the end of 1930, Gillette and Auto Strop merged in a shotgun marriage designed to settle the patent litigation, but the Gillette board of directors—and patent portfolio—was remade. The Gillette insiders were swept from the executive committee of the board, and by the end, only one was on the executive committee, Auto Strop's Henry Gaisman. The story here is that the expensive razor model failed to capitalize on their intellectual property and when they were forced to meet the competition following the patent expirations, they went on to market share dominance and high profitability. (Full disclosure: I'm a financial analyst who covered Gillette for more than 20-years until their acquisition by P&G in 2005. I've communicated with Randal Picker, who authored the HBS linked paper, which was originally published at the University of Chicago's Law School and I cribbed some of the history above from his notes. There is much more to this history and the benefits they achieved working with the military during both World Wars)

Thanks for taking time to share your insight. ...however, for 20 years they made higher profits at a premium razor price point which is a substantial amount of time in business world.

 

[alex2363]

Those early years, starting over a century ago are known as the "Patent Years", during which time Gillette maintained a high price for the razors but quickly changed strategies as the patents were about to expire. Most companies lose market share and profits when they loose patent protection, but Gillette's profits jumped when their business model changed with the razor price dropping from $5.00 to $0.85-including 3 blades that would normally sell for $0.30. The number of razors sold went from ~2 million in 1920 to 15 million in 1925 and their earnings rose by 20X. It became clear that blade sales were tied to the installed base. In the period immediately following the patent expiration, there was a war between blade formats, which ended when Gillette acquired their major competitor, Auto Strop in 1930. In 1922 they started razor "give-aways" in a promotion with Wrigley Gum. But by 1930 the company was headed toward failure; when Auto Strop, a much smaller competitor led by inventor Henry Gaisman, that had wedded patent and trademark law in an effort to lock-in the blade aftermarket for its razor handles and introduced a new blade and blade format that was backwards compatible with the existing stock of Gillette razors. Gillette responded by introducing a new razor, a new blade, a new blade format and a new top price of $1. But, as the new razor blades themselves made painfully clear—“patents pending”—Gillette had not secured its patent position at the time of the launch, and Gillette immediately found itself on the defensive when Auto Strop filed a patent infringement action alleging that the new razors and blades violated Auto Strop’s patents. By the end of 1930, Gillette and Auto Strop merged in a shotgun marriage designed to settle the patent litigation, but the Gillette board of directors—and patent portfolio—was remade. The Gillette insiders were swept from the executive committee of the board, and by the end, only one was on the executive committee, Auto Strop's Henry Gaisman. The story here is that the expensive razor model failed to capitalize on their intellectual property and when they were forced to meet the competition following the patent expirations, they went on to market share dominance and high profitability. (Full disclosure: I'm a financial analyst who covered Gillette for more than 20-years until their acquisition by P&G in 2005. I've communicated with Randal Picker, who authored the HBS linked paper, which was originally published at the University of Chicago's Law School and I cribbed some of the history above from his notes. There is much more to this history and the benefits they achieved working with the military during both World Wars)

Most of this increase occurred due to the pricing of the old patent razor [ the Brownie biggest seller ], this razor was sold in large quantities for a dollar with blades. ...the new patent razor still sold at premium price. Gillette offered the the BostonIan for 5 dollars in silver and 6 dollars for gold models. They had the new patent models from 5 to 75 dollars in price ranges which is high compared to others.

 

[alex2363]

Those early years, starting over a century ago are known as the "Patent Years", during which time Gillette maintained a high price for the razors but quickly changed strategies as the patents were about to expire. Most companies lose market share and profits when they loose patent protection, but Gillette's profits jumped when their business model changed with the razor price dropping from $5.00 to $0.85-including 3 blades that would normally sell for $0.30. The number of razors sold went from ~2 million in 1920 to 15 million in 1925 and their earnings rose by 20X. It became clear that blade sales were tied to the installed base. In the period immediately following the patent expiration, there was a war between blade formats, which ended when Gillette acquired their major competitor, Auto Strop in 1930. In 1922 they started razor "give-aways" in a promotion with Wrigley Gum. But by 1930 the company was headed toward failure; when Auto Strop, a much smaller competitor led by inventor Henry Gaisman, that had wedded patent and trademark law in an effort to lock-in the blade aftermarket for its razor handles and introduced a new blade and blade format that was backwards compatible with the existing stock of Gillette razors. Gillette responded by introducing a new razor, a new blade, a new blade format and a new top price of $1. But, as the new razor blades themselves made painfully clear—“patents pending”—Gillette had not secured its patent position at the time of the launch, and Gillette immediately found itself on the defensive when Auto Strop filed a patent infringement action alleging that the new razors and blades violated Auto Strop’s patents. By the end of 1930, Gillette and Auto Strop merged in a shotgun marriage designed to settle the patent litigation, but the Gillette board of directors—and patent portfolio—was remade. The Gillette insiders were swept from the executive committee of the board, and by the end, only one was on the executive committee, Auto Strop's Henry Gaisman. The story here is that the expensive razor model failed to capitalize on their intellectual property and when they were forced to meet the competition following the patent expirations, they went on to market share dominance and high profitability. (Full disclosure: I'm a financial analyst who covered Gillette for more than 20-years until their acquisition by P&G in 2005. I've communicated with Randal Picker, who authored the HBS linked paper, which was originally published at the University of Chicago's Law School and I cribbed some of the history above from his notes. There is much more to this history and the benefits they achieved working with the military during both World Wars)

How can you foresee this as a valid expensive razor model assessment since Gillette was taking over by Autostrop and the razor business model is Gaisman’s not Gillette, it would be premature to determine the if the expensive razor is working or not.

 

[alex2363]

Those early years, starting over a century ago are known as the "Patent Years", during which time Gillette maintained a high price for the razors but quickly changed strategies as the patents were about to expire. Most companies lose market share and profits when they loose patent protection, but Gillette's profits jumped when their business model changed with the razor price dropping from $5.00 to $0.85-including 3 blades that would normally sell for $0.30. The number of razors sold went from ~2 million in 1920 to 15 million in 1925 and their earnings rose by 20X. It became clear that blade sales were tied to the installed base. In the period immediately following the patent expiration, there was a war between blade formats, which ended when Gillette acquired their major competitor, Auto Strop in 1930. In 1922 they started razor "give-aways" in a promotion with Wrigley Gum. But by 1930 the company was headed toward failure; when Auto Strop, a much smaller competitor led by inventor Henry Gaisman, that had wedded patent and trademark law in an effort to lock-in the blade aftermarket for its razor handles and introduced a new blade and blade format that was backwards compatible with the existing stock of Gillette razors. Gillette responded by introducing a new razor, a new blade, a new blade format and a new top price of $1. But, as the new razor blades themselves made painfully clear—“patents pending”—Gillette had not secured its patent position at the time of the launch, and Gillette immediately found itself on the defensive when Auto Strop filed a patent infringement action alleging that the new razors and blades violated Auto Strop’s patents. By the end of 1930, Gillette and Auto Strop merged in a shotgun marriage designed to settle the patent litigation, but the Gillette board of directors—and patent portfolio—was remade. The Gillette insiders were swept from the executive committee of the board, and by the end, only one was on the executive committee, Auto Strop's Henry Gaisman. The story here is that the expensive razor model failed to capitalize on their intellectual property and when they were forced to meet the competition following the patent expirations, they went on to market share dominance and high profitability. (Full disclosure: I'm a financial analyst who covered Gillette for more than 20-years until their acquisition by P&G in 2005. I've communicated with Randal Picker, who authored the HBS linked paper, which was originally published at the University of Chicago's Law School and I cribbed some of the history above from his notes. There is much more to this history and the benefits they achieved working with the military during both World Wars)

Do you know why the portfolio was remade. .....Autostrop ordered a financial auditing after Gillette agreed to buy his company. The auditing protects against undisclosed problems for shareholders.

The auditing revealed that Gillette overstated its sales and profits for years. Gaisman knew this can hurt Gillette so he negotiated for large amounts of Gillette stocks with voting rights. He then took over Gillette as Pelham, Fahey and all of the executives were resigned. King Gillette resigns too but was reelected in April 1931. Gaisman appointments 5 new vice presidents from his old Autostrop and he now starts a new Gillette era.

 

[alex2363]

This great. Thanks.

I always knew CPI was only a rough indicator. But never knew how to get a better one.

Now I can argue my way all over the internet!!

 

[alex2363]

One indicator of how much they charged was that the competition wedge safety SE wedge razors were selling for $1.50 with wedge blade. But Gillette asked a whopping five bucks.

The CPI calculator I found on google adjusts $5 in 1915 to be $117 in 2016.

Makes the Merkurs look like a bargain.

They sustained this premium price model for long time until 1930 when Gillette was now a new organization [ Autostrop owned]....new owners took a blade strategy approach.

 

[alex2363]

I'm wondering how their ad campaign would run?
after decades of trying to convince the world that
"more blades means a better, smoother, faster shave"
well, what do they say now when they go back to a one-blade razor,
and a non-disposable one at that?

That's a good question. .maybe premium razor pricing?

 

[alex2363]

This would be wonderful news for the growth of traditional wet shaving.

Get ready to make shelf space

 

[dk-109]

I did not believe this was true. I went to the AOS store at the mall in Burlington, Massachusetts. They confirmed and had pictures. I now believe. Tech - Metal - approx. $70. - Available May/2016.

 

[Leonard]

Any rumors of a similar quality TTO?

 

[Face&Head]

Thanks for taking time to share your insight. ...however, for 20 years they made higher profits at a premium razor price point which is a substantial amount of time in business world.

Actually in 1920, the last full year of their patent protection, they only made about $600,000. After they stopped the high priced razor model their profits exploded to $18 million by 1925. This change was forced on them by their competitors and they would not have survived without it.

 

[sixpointone]

I did not believe this was true. I went to the AOS store at the mall in Burlington, Massachusetts. They confirmed and had pictures. I now believe. Tech - Metal - approx. $70. - Available May/2016.

Hi dk-109,

Might you know if the design will be a two piece, or a three piece, razor?

Best,
John