Amazon takes a 5 loss on every 79 Kindle sale

first_imgAmazon’s never been afraid to chart its own course. For ages, the company eschewed advertising in favor of its free shipping program. Earlier this year, they took a chance on a new ad-supported Kindle model. At $114, it was $25 cheaper than the ad-free version. Now, the new Kindle with special offers sells for $79 — reportedly $5.25 less than it costs them to build it.That’s based on a new iSuppli teardown. While the component and assembly costs can be guessed at, there are other factors that contribute to the Kindle’s total cost. Development and promotional costs, for example. Ultimately, no one except Amazon knows exactly how much the Kindle line-up costs to produce.There was a similar report this fall that stated the new Kindle Fire was reported to sell for less than it cost to produce. A follow-up report in October then surmised that Amazon actually makes about $50 on every Kindle Fire sold.And, really, Amazon takes an even bigger loss when you factor in the free shipping it provides for every Kindle (though year-end accounting can help negate those kind of losses). At the end of the day, it doesn’t matter. People load their Kindles with content purchased from Amazon, and the $79 price tag leaves customers with plenty of cash to pad Amazon’s bottom line with eBook purchases and digital subscriptions.McDonald’s doesn’t give away free coffee because it’s a charity. It’s all about getting customers in the door so that they can spend money on extras. The $79 Kindle might be a loss leader, but it’s clearly one that works for Amazon.More at Mainstreetlast_img

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