Sunday, November 20, 2011

Estimating Manufacturing Costs

Now that the Kindle Fire is out, someone has taken it apart and figured out what it costs to make.

Amazon.com Inc.'s Kindle Fire tablet, which started shipping this week, costs $201.70 to make, a research firm said Friday. That's $2.70 more than Amazon charges for it.

I keep pointing this technique out to my microeconomics classes. If you have experience in an industry, it isn't that difficult to figure out the competition's costs. From the data in the article, it looks like Amazon intends to make most of it's profit off of selling content rather than hardware.

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