Saturday, November 27, 2010

The prime in Amazon Prime

One challenge was selecting the annual fee for the [Amazon Prime] service; there were no clear financial models because no one knew how many customers would join or how it would affect their purchasing habits. The team ultimately went with $79 mainly because it's a prime number. "It was never about the $79 dollars. It was really about changing people's mentality so they wouldn't shop anywhere else," says Vijay Ravindran, who worked on the Prime team and is now chief digital officer for The Washington Post.
--Brad Stone, Bloomberg Businessweek, on how to set prices when you don't have a model. HT: Marginal Revolution

No comments: