The $79 Kindle Costs Amazon $84 to Make
Amazon's $79 Kindle ereader is probably as cheap and cheerful as they get, but the device is actually more expensive for Amazon to build than it is for us to buy.
When Amazon announced the exciting Kindle Fire tablet and the new touchscreen Kindle, the company also announced that the ad-supported basic Kindle ereader was dropping down to just $79. The ad-supported Kindle was first launched in April of this year and cost $114, which was seen as extremely cheap for an ereader at the time. When the price dropped to $79, well, we couldn't believe our eyes. However, it seems that selling the device so cheap means Amazon is actually taking a hit when it comes to production costs.
MainStreet reports it has received confirmation from iSupply with regard to the production cost of the Kindle. iSupply said it did a teardown of the new Kindle and found that the total cost of materials used in each device, including the e-ink display screen and printed chip board, is $78.59, while the total cost of putting it together is $5.66. This brings the production cost of each $79 Kindle to $84.25 and would mean Amazon is taking a loss of $5.25 with each unit sold.
Of course, while Amazon is taking a loss of $5 for each Kindle sold, you have to remember that this is the ad-supported model. Amazon can offer it to us for a low price because it's receiving advertising revenue from the companies using the device to promote their products or services. What's more, each person with a Kindle also logs into their Amazon account during device set-up, which means they have a handy direct line to Amazon's book store, where they can spend more money on books.
That's only gasoline.
That's only gasoline.
Not sure where you got that idea..... Companies can price their products however they see fit, as long as someone is willing to buy it... The only exception is gasoline and cases of price fixing.
No. What you are thinking about is "price dumping" and that only applies to international markets:
http://en.wikipedia.org/wiki/Dumping_%28pricing_policy%29
And if the European version is 99 Euros, that is over the threshold.
Don't worry...Apple will learn. They might not want to learn...but they will.
Not hatting on amazon, just wtf guys, this means nothing much. They take a tiny hit and make tons more by selling 0's and 1's later
(disclaimer - that is meant in humor only - I am not inciting a riot in any way. Violance is not the answer, even againts dirty, greedy publishers)
No, unless you have the lost money coming from a seperate revenue stream it's just stupid.
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If you have a one-off product with no peripherals, like a fridge or a wall clock, if you sold those less than cost the company would just go bust.
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However with peripheral items such as electronic books, i'm sure the internal numbers show that an average Kindle user buys an average of XYZ books a year but at an average cost of $10 per book they really only need to sell 2 or 3 books for the profits to break even and they know yu are going to buy books otherwise what is the point of buying a Kindle in the first place?
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So not illegal, and in this instance not stupid either, in fact very smart because the cheap selling price is a hook that leads to a loyal repeat customer.
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Doesn't anyone around here have an MBA or am I just pissing in the wind?