Captive product pricing: How to accessorize core products

Captive product pricing is a strategy where companies sell a core product, often at a lower price, and require customers to purchase complementary accessories or services at a premium to use the original product effectively. This approach is used widely across various industries, from household items like Swiffer mops and Brita water pitchers to technology products and SaaS offerings. The strategy boosts revenue, fosters customer loyalty, and reduces competition by ensuring that customers continue purchasing necessary add-ons from the same brand. However, it carries risks such as customer frustration due to high accessory costs and potential damage to brand reputation if perceived as exploitative. For captive product pricing to succeed, companies must carefully price both core and complementary products, understand market demand, and continuously offer innovative accessories to maintain customer interest.

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