Amazon’s Ad-supported Kindle Price: Too High?

Posted on April 12, 2011 by Ian Betteridge

TUAW on the release of an ad-supported Kindle from Amazon:

“Still, the $114 price point seems a little silly; $99 would be a much better psychological buy-in point.”

I think that $25 is a fair reflection of the value of the ads. Remember, these ads are home-screen only, and not in the books. Pundits constantly over-estimate the amount of revenue that ads can bring in, and the expectation that Amazon could price a Kindle at $99 based on these kinds of ads is wrong.

No one in the world knows more than Amazon about pricing for a profit.

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  • http://loud.anotherquietday.com Baldur

    What you say is absolutely true, but what TUAW says is also true—from the buyer’s perspective. The problem here is that there is a huge disparity in the value of the ad from the advertiser’s perspective and the annoyance of the reader’s part. A device where a part of it has been permanently auctioned off to ad cos is a hard enough a sell even if it were cheaper.

  • http://www.facebook.com/craiggrannell Craig Grannell

    I’m not sure they should have bothered at all. Are people really going, man, I’d buy a Kindle if only it was 25 bucks cheaper? Better to stick with it as a clean brand, free from annoying ads, or to get enough ad revenue in to push it below a price-point that’d make more people sit up and take notice. (I agree with TUAW that $99 would be a sweet spot for that in the USA.) Still, this might just be a test run—if it takes off, the slots would get pricier for advertisers and the price would fall. I suspect Amazon’s real aim would be to get an ad-funded Kindle down to free, supported/subsidised by advertisers.

  • http://www.technovia.co.uk Ian Betteridge

    Some people will like the ability to save $25. Honestly, I’ll say it again: there isn’t a company in the world that understands pricing better than Amazon, far, far better than you, me, or TUAW. They have more data about what sells at what price points than anyone else in the world.

  • http://www.technovia.co.uk Ian Betteridge

    I’m actually always astounded when people talk about “annoying” ads. All ads *aren’t* annoying.

    Consider this: those ads at the top of Google search are incredibly well clicked on. The reason? They’re *useful*.

    An interstitial is annoying. The “Man your man can smell like” campaign? Entertaining (and massively popular).

    Saying “annoying ads” is like saying “shit content”.

  • Anonymous

    I think it’s worth remembering too that the scope for ‘annoying’ i.e. distracting ads on a kindle is significantly less than it is on devices which allow animation, colour and sound. Certainly no more annoying than an ad on the back of whatever magazine you’re reading.

  • http://loud.anotherquietday.com Baldur

    Ads aren’t annoying, really, but auctioning off a part of a device you’ve paid for to advertisers certainly is. You see ‘annoyance’ and assume I’m referring to the ads. What I mean is that the deal, the loss of control, the package as presented, comes with considerable annoyances for the reader. For example, making the screensaver customisable is one of the most requested features among avid Kindle users.

    I do disagree with you about ads in general (there is a huge difference between a search ad that ties in with intent and the rest), but that is irrelevant in this case. This is going to look to readers more like the tactics used by Microsoft to cripple Windows 7 for netbooks than a subsidy.

    IMHO, as usual :-D

  • http://loud.anotherquietday.com Baldur

    There’s also a chance that this will increase the sales of the now mid-range Wifi Kindle. A very slightly cheaper device with a clear and understandable drawback makes upsells easier.

  • http://www.technovia.co.uk Ian Betteridge

    Thinking about it from an advertiser’s perspective: If your ad is relying on being annoying, “yr doin it rong”, as they say :)

  • http://www.technovia.co.uk Ian Betteridge

    Well, obviously: If it was annoying to someone, they’d hardly be likely to buy it :)

    (As an aside: One of the things I find fascinating about the debate about ad and user data is that user data is precisely what you need to make ads more relevant – as you put it, to “tie in with intent”. And yet the people who are most annoyed by irrelevant ads are the ones more strongly resisting giving data, even when that data is anonymised and impossible to pin on their real world identity. There’s a post in this, somewhere…)

  • http://www.joewilcox.com Joe Wilcox

    I was going to write about $99 as better, too. TUAW got there first, and I agree.