Amazon's Kindle 2.0, (Pricing) - Essay Example

Amazon Kindle 2.0 - Pricing and Section # of When the Amazon Kindle 2.0 was launched in February 2009 it was priced at $359. The pricing strategy followed by Amazon for the Kindle is the price skimming strategy (Pricing Strategies). This strategy focuses charging a high price for a short time when the product is launched for the first time. It is suitable for innovative products and for those whose distribution is to be limited to a few who really want the product and are willing to pay a higher price to get it.

Hence, the main objective of skimming pricing is to skim the market and benefit for a short term until the uniqueness of the product is retained. Therefore, Amazon decided to use the skimming model to make sure that they had increased short term profits and portrayed image of Kindle as a high end product. Later, in July 2009 the price of Kindle 2.0 was dropped to $299 when the new model Kindle DX was launched (Kindle Dx vs Kindle 2.0). There are numerous reasons why this would have been done.

The most plausible reason for this is that the newer version, i.e. the DX had better features than Kindle 2.0 and it was priced above $400. Another reason was a report by PC World that stated that each Kindle 2.0 device cost approximately $186 to build (The Kindle Pricing Strategy & The Kindle Pricing History). While PC World forgot to include the price of the software that the device hosted, it made a mark on the audience and Amazon had to reply by reducing prices. Similarly, the reduction in price was also made possible by the decrease in manufacturing costs resulting from the Prime View International’s acquisition of E-Link.

Prime View is Kindle’s assembler and E-Ink provided them with the screens. By the acquisition Amazon was able to get better prices which it passes onto its consumers by reducing the price of Kindle 2.0. The future pricing of the Kindle devices should be done by taking in to account the prices of competing devices such as Sony E-Reader and the Apple iPad. The E-Readers by Sony are available in three different models each priced at $399.99, $299.99 and $199.99 respectively (All Reader Digital Books) .

While the Apple iPad (16GB) is priced at $499 and the one with 3G support is priced at $629 (Apple- iPad - Price ). Therefore, the future pricing of Kindle devices should be done based on the comparison of the features offered by the Kindle devices and the Sony’s E-Reader and the iPad. Today, Amazon charges $259 for the Kindle 2.0 and $489 for the Kindle DX. I propose that they should charge about $200 for the Kindle 2.0 and $300 for the Kindle DX, so that both devices are comparable to the Sony’s E-Readers.

As far as the Apple iPad is concerned it offers a set of different features for the users, which include, internet surfing, photos, iPod i.e. music and videos etc. Therefore it is priced higher than the Kindle DX, but if Kindle has to retain its market share it needs to balance the price with the features. Works CitedAll Reader Digital Books. (n.d.). Retrieved March 21, 2010, from http://www.sonystyle.com/webapp/wcs/stores/servlet/CategoryDisplay?catalogId=10551&storeId=10151&categoryId=8198552921644523779Apple- iPad - Price . (n.d.). Retrieved March 21, 2010, from http://www.apple.com/ipad/pricing/Kindle Dx vs Kindle 2.0. (n.d.).

Retrieved March 21, 2010, from http://www.brighthub.com/hubfolio/michele-mcdonough/articles/38334.aspxPricing Strategies. (n.d.). Retrieved March 21, 2010, from http://marketingteacher.com/Lessons/lesson_pricing.htmThe Kindle Pricing Strategy & The Kindle Pricing History. (n.d.). Retrieved March 21, 2010, from http://www.askdeb.com/blog/books/the-kindle-pricing-strategy-the-kindle-pricing-history/