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

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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…
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Amazons Kindle 2.0, (Pricing)
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Amazon's Kindle 2.0, (Pricing)

Download file to see previous pages... 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 ...Download file to see next pagesRead More
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