We think Amazon’s strategy, however, is to raise electronic book prices over time, while simultaneously influencing the book publishers to accommodate at least a partly electronic book model.” A suggested new price point that could “dramatically” increase margins for publishers and Amazon: $12.50.Of course, this may or may not really happen. How much faith do you have in research analysts these days? They haven't been right much lately as far as I can tell. I also have to wonder if Amazon is really willing to tick off so many customers just when the Kindle is picking up steam and seems to be actually having an impact on overall book sales.
The analysts argue that by raising the average price by $2.51, Amazon’s margins could increase from 6 percent to 20 percent on the sale of an e-book. That, they say, is “comparable to its physical book business” since Amazon would only have to sell 1.7 e-books to match the profits from the sale of a hardback, instead of 7.
Would an increase of $2.51 per book cause you to buy fewer Kindle books, or is that below the tipping point for you?