Abstract
The inkjet printer business had adopted the “bait and hook,” also known as the “razors and blades” or “tied-products,” business strategy, offering a basic printer product at a very low (possibly below cost) price but charging a highly marked-up price for its proprietary ink cartridge. This case explores the pricing of two interrelated products: the printer and its ink cartridge to maximize the overall profit. This case is designed as an introductory-level case study that emphasizes the basics of spreadsheet modeling. The learning goals for this case are to improve students' skills of modeling a business problem of this nature, determining the parameters involved, exploring the tradeoffs between different pricing criteria, and analyzing how profit can be affected by variations in the input parameter values such as printer cost, cartridge cost, printer price elasticity, and cartridge-to-printer projected sales ratio. Case Teaching Note: Interested Instructors please see the Instructor Materials page for access to the restricted materials. To maintain the integrity and usefulness of cases published in ITE, unapproved distribution of the case teaching notes and other restricted materials to any other party is prohibited.
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