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Originally Posted by howyoudoin
If the reverse is true, and sales at 14.99 yield greater profits than sales at 9.99, why isn't Amazon pushing for the greater pricing instead?
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I do not know whether $14.99 or $9.99 yields greater profits. Quite frankly, I do not know whether selling Harry Potter books at $9.99 sells more Harry Potter books than if the price were $14.99.
Point of fact is that none of us know that information.
Amazon knows (or claims) that among
Amazon customers it sells overall (in gross) more books at $9.99 than at $14.99. What Amazon has said is that of the whole catalog of books it sells, it sells 1.74 books at $9.99 compared to 1 book at $14.99. Amazon hasn't identified whether that disparity is the result of increased sales of indie erotica at the lower price point or increased sales of New York Times bestsellers only or of Hachette published fiction. Amazon has left a lot to interpretation and assumption.
But more critically is that Amazon is, at best, telling us about Amazon sales to Amazon customers. Granted that Amazon dominates the ebook market in terms of sales, but what we do not know is what the effect would be on the total market -- Amazon customers and non-Amazon customers combined -- should the price be $9.99 rather than $14.99. It might be that Amazon customers are the "cheap" customers in the sense that they are highly price conscious and will only buy at certain price points. Kind of like the difference between the customer who shops at the Dollar Tree store and the customer who never shops there but does shop at Nordstrom.
Amazon only provides a limited view of the market that Hachette and the other publishers inhabit. What may be good for Amazon because of the type of person who shops at Amazon, may not be good for Hachette because of all the other outlets it sells to. We simply do not have enough information.
And as to the question as to "why isn't Amazon pushing for the greater pricing instead?", Amazon has clearly been more interested in market share that profitability. Consequently, it is possible that Amazon sees $9.99 as a way to further increase market share even at the expense of profitability. The $14.99 price point may well be more profitable for Amazon but might not work to increase market share. Market share has been Amazon's mantra since day 1; perhaps it is changing its mantra to profitability, but that hasn't been what Bezos has been saying as he resists shareholder demands.