What is Bait and Hook Business Model? Definition of Bait and Hook Business Model, Bait and Hook Business Model Meaning and Concept

The bait and hook business model is to sell a product at a very low price (bait) in the hope of long-term profit from the purchase of spare parts, consumables or services (hook).

The bait and hook model is a sales strategy where a basic product is offered at a very low price (even at a loss) and then the customer is forced to repeatedly purchase spare parts, consumables or services that have a relatively high price..

Origin of the bait and hook model

The origin of this business model dates back to the end of the 19th century. At that time the merchant King C. Gillette invented a razor where the blades were disposable. This avoided the inconveniences of having to sharpen the traditional blades, it was enough to change the razor blades for new ones.

Gillette then devised a business model where it sold the machines at very low prices, attracting customers and then making long-term profits from repeat sales of razor blades.

Advantages and disadvantages of the model

The great advantages of the model are customer loyalty and ensure long-term profits. The disadvantages, on the other hand, come from the risk of selling bait units without achieving sales of spare parts or consumption. There is also the problem that a competitor can produce compatible refills or consumables and appropriate the proceeds from the sale of the bait.

Examples of bait and hook

  • Razors : Razors (bait) and spare blades (hook).
  • Video game consoles : Console (bait) and game licenses (hook).
  • Printers : Printers (bait) and ink cartridges (hook).
  • Water dispenser sources : Water dispenser (bait) and water bottles (hook).