Sharp practice? The razor heads that cost just 5p to make, but sell for £2.43 each

Article from the UK’s Daily Mail
Men are paying over the odds for a clean shave because of a huge mark-up on razor heads.
The products sold by Gillette and other companies cost as little as 5p to make, industry insiders have revealed. But consumers are charged up to £2.43 a piece – a mark-up of more than 4,750 per cent.

Brand names: Gilllette can afford to hire sports stars Roger Federer, Thierry Henry and Tiger Woods. The price of shaving products at leading supermarkets is under investigation by the Office of Fair Trading. The Government watchdog is involved in a long-running inquiry into alleged collusion between manufacturers and retailers.
It is alleged that salesmen from Procter & Gamble, which bought Gillette for $57billion (£35billion) in 2005, urged retailers not to cut the shop price of its brands.
A check of Tesco, Asda and Sainsbury’s found the UK’s three biggest supermarkets are selling Gillette’s Fusion Power cartridges at the same price.
A pack of eight costs £18.53, and the replacement razor heads are so expensive that they are now the most shoplifted product in the High Street.
Special security measures have been introduced, including sealing the packs in boxes with an electronic tag which sets off an alarm if it is not removed before leaving the store, and CCTV that activates if the product is removed from the shelf.
A pack of four Fusion Power cartridges costs only 20p to manufacture, plus 8p for packaging. But they are sold for £9.72 – £9.44.
An industry insider said Gillette takes the lion share – £6.28 – to cover its operating costs and make a profit. Some £1.90 goes to the retailer and £1.26 to the Government in VAT.

Smooth operators: Gillette sell the 5p razors for £2.43, a mark up of 4,750 per cent
The insider said: ‘I know as a matter of fact that it will not cost more than 5p to produce a refill cartridge, it is a question of pennies given the bulk involved, yet Gillette is charging a wholesale price which is much higher.
‘The figures tell you why it can afford to use stars such as Tiger Woods on its payroll (for advertising) and how it could afford to give David Beckham a diamond-encrusted mach3 razor for Father’s Day some years back costing $54,000.
‘With the Gillette products, the company is so dominant that it is able to spell out the terms of sale, including the price they want to see, to retailers.’
As well as Beckham and Woods, Gillette has splashed out large amounts of money on tennis star Roger Federer and footballer Thierry Henry to help market its products.

Cost to produce and the profit made on blades

Cost to produce and the profit made on blades


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