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Paying Less Than $100 for a Kindle is Like Paying $1.29 a Pound for an Fresh Turkey at the Supermarket
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11/23/2011  •  Comment
By JTD

Turkey Loss LeaderOnce you're in the store, you're sure to see plenty of other stuff you want to buy.

Even more than selling digital content, I think Amazon wants to sell you a Prime Membership.  Once you’ve got the Kindle, it’s hard not to want that membership to get access to the Amazon lending library.  After all, you’ll get some free reading, plus some free video streaming to your PC or Kindle Fire (if you’ve gone that route) and no per-purchase shipping charges on two-day delivery of physical merchandise.

Andrew Wassreiler at iSuppli has a nice write-up of the materials and manufacturing costs of the Kindle Fire in one of iSuppli's Teardowns.    His article goes on to explain the model behind Amazon’s pricing strategy.  He compares it to wireless phone companies taking a loss on phone prices in order to win two-year service contracts. 

Other articles have estimated the cost of delivering a $79 Kindle to be about $84.  No wonder they don’t throw in the power supply for the touch.

At this point, Amazon is giving away the store.  Why wouldn’t you want to go to Amazon for your hard copy books (and toasters too) from them instead of schlepping to the local Wal-mart? 

Are these deals too good to be true?  For the moment, I don’t think so.  I plan to enjoy them now, taking care not to replace all of my book buying with Kindle content.

Tags: Amazon; Kindle; Pricing
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