The “razor and blades” pricing is (as the market demonstrates) a dominant strategy. The other pricing strategy (cost-plus) is preferable for the customers printing a lot, not for customers who print little. Then add some customer myopia: I need a cheap printer, where cheap is initial out of pocket, not total cost of ownership. And there you have it: all suppliers ‘must’ follow the dominant pricing strategy because the myopic customer demands it. The twice as expensive printer up front just won’t get store space.
Brother might be (or, was?) somewhat of an outlier for the informed consumer. But who buys a Brother right? HP and Canon dominate the market.
General point is that individual suppliers in a multi supplier market have to take the dominant pricing strategy as a given, or differentiate along other axis.
The whole thing you are talking about is underpined by the fact that if someone else starts making ink cartridges the manufacturer can get the government to hassle them. If instead the government would say “though luck, better luck competing for the costumers next time” you wouldn’t have this system as the dominant pricing strategy because it wouldn’t work.
Imagine a world where Ford sells you a car you can only fuel at a Ford gas station. Maybe they enforce it by having a special tank cover only their pump nozzles can get through. And then when some other gas station makes nozzles which can also fuel those cars people paid from your taxes come and impound those nozzles as “circumvention devices”. Do you think that would impact the price of gas those car owners pay?
The “razor and blades” pricing is (as the market demonstrates) a dominant strategy. The other pricing strategy (cost-plus) is preferable for the customers printing a lot, not for customers who print little. Then add some customer myopia: I need a cheap printer, where cheap is initial out of pocket, not total cost of ownership. And there you have it: all suppliers ‘must’ follow the dominant pricing strategy because the myopic customer demands it. The twice as expensive printer up front just won’t get store space.
Brother might be (or, was?) somewhat of an outlier for the informed consumer. But who buys a Brother right? HP and Canon dominate the market.
General point is that individual suppliers in a multi supplier market have to take the dominant pricing strategy as a given, or differentiate along other axis.