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Strategy Canon

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Commoditize your complement

By Dave WhittemoreUpdated 1 company case study

What does “Commoditize your complement” mean?

Commoditizing your complement means making a product that customers use alongside yours cheap and interchangeable, so that demand for your own product grows. Joel Spolsky named the idea. Google funding Android and Chrome to keep phones and browsers cheap and open around search is a well-known example.

Also calledcommoditizing complements (Spolsky)modularizing an adjacent layer (Christensen)

How it works

Demand for a product rises when the price of its complements falls. A company can push that price down by giving the complement away, funding an open standard or inviting many makers to compete in supplying it. Each move strips out a supplier's margin and bargaining power. Google funded Android and Chrome so phones and browsers would stay cheap and open around search. Microsoft licensed its operating system to any PC maker, and clone makers competed on price while every machine carried the same OS.

The subsidy costs money and pays off only if the company's own product captures the extra demand.

Shoppers bring volumeConsumers check GoodRx for prescription prices
Many PBMs supply pricesDozens of benefit managers compete to supply
No supplier holds powerTop three: 61% of revenue (2018), 22% (2025)
Card works nearly everywhereAccepted at 70,000+ US pharmacies
How GoodRx turned the pharmacy benefit managers behind its discount prices into interchangeable suppliers of the same price feed.

How companies won with Commoditize your complement

From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.

vs. SingleCare · 2016–25

GoodRx

Consumer volume turns PBM networks into interchangeable price feeds

What it did
Dozens of PBMs compete to supply prices; top three fell from 61% of revenue (2018) to 42% (2020) and 22% (2025)
SingleCare
Its own network: 35,000 pharmacies (2026); comparison guides tell shoppers to check both cards and take the lower price
Read the GoodRx case study →
vs. Apple · 1982–95

Microsoft

Clone competition commoditizes the hardware

What it did
Compatible makers competed on 'the fastest machine, the cheapest machine, the most portable machine'
Apple
Apple priced a premium bundle (Mac $2,495 in 1984)
Read the Microsoft case study →

Commoditize your complement vs. Platform Strategy and Loss leader

What it isHow to tell it apartExample
Commoditize your complementMaking a product sold alongside yours cheap and interchangeable, to raise demand for yoursFind the neighboring product whose price fell because of the company's own actionGoogle funding Android and Chrome around search
Platform StrategyLetting outside businesses build and sell products on your foundationOutside builders add to your offer; commoditizing squeezes a neighboring layer's marginShopify's API, App Store and Theme Store
Loss leaderSelling one of your own products below cost to draw buyers to othersThe cheap item is the company's own; a complement is someone else's productSupermarkets pricing staples low to bring in shoppers

How to tell if a company has it

  1. A complement customers needName the separate product customers use with the company's offer, such as the phone, browser or PC.
  2. A deliberate move to cheapen itA subsidy, open standard, open-source release or licensing policy the company actually carried out.
  3. The complement got cheaper or swappablePrices fell or suppliers became interchangeable, as GoodRx's top three PBMs fell from 61% to 22% of revenue.
  4. A link to demand for its offerShow how the cheaper complement brought more buyers or usage to the company's product, and rule out unrelated price drops.

Who names it

AuthorWhat they call it / where it appears
Spolsky +Commoditize your complement
ChristensenDeliberately modularizing an adjacent layer
Brandenburger & Nalebuff +Managing complementors in the Value Net
← Aggregator StrategyMonopolize a Small Market First →