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Two-Part Tariffs

by Jadrian

When designing the pricing model of Barbies, Mattel looked to Gillette's pricing model for razors and razorblades, which is a form of second degree price discrimination that utilizes two part tariffs as a way of maximizing profit from group buyers. The doll (or razors) are sold at very low prices, but the accessories (or razor blades) are the main drivers of profit for the firm. This model allows the company to sell a lot of base products at near marginal cost, but then charge high prices for the accessories, which are a critical component of the overall product. 

Toys That Made Us -- Barbie and Razorblades

Mattel decided to price their barbie accessories the same way the Gillette priced razors

from The Toys That Made Us (2017)
Creator: Brian Volk-Weiss
Distributor: Netflix
Posted by Jadrian