The "profit model shift" as explained in the book "Ten Types of Innovation: The Discipline of Building Breakthroughs" refers to a strategic change in the way a company generates its revenue. This shift often involves a change in the company's business model or pricing strategy. In the case of Gillette, once its patent ran out, it strategically began to charge more for its once inexpensive blades. Customers, accustomed to the product, willingly paid more, resulting in a significant increase in Gillette's profits. This is an example of a profit model shift, where the company changed its pricing strategy to boost profits.

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Ten Types of Innovation: The Discipline of Building Breakthroughs

Stop wasting your time on brainstorming sessions that only improve upon existing offerings marginally. Based on exhaustive case studies and research o...

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Once Gillette's patent ran out, however, it was time for a change. Gillette took advantage of its customers' user habits and strategically began to charge more and more for the once inexpensive blades. Without thinking twice, customers began to pay a lot for a razor that would soon dull and be tossed aside. Gillette enjoyed substantial profit boosts as a result of its timely shift in profit model.

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A startup can use the key topic of profit model shift to grow by strategically adjusting its pricing or revenue generation model based on customer usage habits, market trends, and competitive landscape. This could involve introducing premium features, subscription models, or tiered pricing. The example of Gillette in the book illustrates this concept. Once their patent expired, they capitalized on their customers' habits and began charging more for their blades, leading to substantial profit boosts. Startups can similarly identify opportunities within their business model to increase revenue.

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