Dremel Tools Dremel sells a high speed rotary tool appropriate for many workshop projects. They have developed hundreds of accessories and bits for their tools for many different applications. Why is the markup on the accessories higher than the markup on the rotary tools?

Dremel is engaging in a form of metering. Purchasers differ in their willingness to pay for the continued use of the system. Those who value it a lot will purchase many different accessories. Those who have lower willingness to pay are going only get the more basic bits. So, a higher margin for the accessories allows Dremel to extract more of the surplus from the high types without losing the low types.