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.
Market research often falls down on one simple flaw: if you ask consumers what features they want before you show them a product, it’s almost never in line with what they end up buying:
“Consumers didn’t ask for tablets,” she points out in her summary. “In fact, Forrester’s data shows that the top features consumers say they want in a PC are a complete mismatch with the features of the iPad.”
If you give someone a feature list of the iPad, almost no one would buy it. Yet, give them the product, and they do. The “check list” approach to marketing fails – unless you’re marketing to someone who buys with a check list in hand. And who, other than IT managers, ever does that?