Amazon.com with New Tricks

If you have ventured on to Amazon.com lately you may have seen one of their latest ploys to get consumers to buy more of their goods. Now each product page has a bundled good for purchase with the good. Before one can scroll down to read the reviews of the product one sees the “Better Together” section. Below is a screen shot from the site with Talladega Nights: The Ballad of Ricky Bobby priced with Pirates of the Caribbean.

Even though it may appear that buying these DVDs together one will save about $21, the price given is actually the price of both movies combined. So is this actually a creative pricing strategy? Buying the two goods together will reduce the average cost of the goods as shipping them together will be cheaper, but the marginal cost is unaffected. Also Amazon.com is known worldwide for having some of the cheapest prices for books and other goods. So by buying both products here one is achieving more consumer surplus and Amazon.com is earning more revenues.

The “trick” here though is that Amazon.com is only providing the appearance of a bundled good as the goods can be separated at no charge on the checkout page. Which brings us back to the question, is this a pricing strategy or marketing ploy?

Posted by Michael Ledwith, Jessica Halper, Drew Muir, and Jake Carter-Lovejoy