Archive for the ‘Price elasticity’ Category

Amazon and the “power of free” …

July 24, 2018

Over the weekend, Bernie Sanders and NY Dem Congressional candidate Alexandria Ocasio-Cortez were barnstorming deep-red states with their Progressive platform: Medicare for all, free college, minimum wage, guaranteed job, etc. Source

Many dismiss the ideas as unaffordable pie-in-the-sky.

But in class, I always preached: Don’t underestimate the “power of free”.

Here’s a real life example to prove the point.

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Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

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Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

Amazon and the “power of free” …

November 13, 2015

Yesterday in class, I mentioned some work by Chris Anderson of Wired on the “Power of Free”

Free: How Today’s Smartest Businesses Profit by Giving Something for Nothing

Here’s a real life example of the power of free.

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Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

image

=====

Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

Amazon and the “power of free” …

July 1, 2015

Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

image

=====

Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

Amazon and the “power of free” …

November 19, 2014

Everybody knows that Amazon’s free shipping program has been a resounding success.

So much so. that the company has announced that it will be moving the minimum qualifying order up from $25 to $35 … inducing shoppers to fill  their carts fuller or switch to the highly profitable Amazon Prime program.

The free shipping program’s success was highly predictable based an an apparently inadvertent “matched market test” that Amazon did.

image

=====

Here’s the skinny on the Amazon’s inadvertent market test …

(more…)

McDonald’s replacing $1 menu with a buck-and –a-half menu … ouch!

September 9, 2014

Relax, we’re just speculating … it’ll only happen if the fast-food workers get the $15 per hour that they were clamoring for last week

Economists at the Heritage Foundation have observed that fast-food joints operate on very slim profit margins (about 3% on average) so they’d have no choice but to bump up prices. to stay even.

 

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The Heritage economists estimate that a $15 minimum wage for hamburger flippers would force restaurants to raise average menu prices about 40% in order to hold the current level of profitability.

Here’s the essence of their analysis …

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