Amazon is attempting to create a new pricing model and it sucks.
Currently a manufacturer would set a “list price”. The seller (like Walmart) knew what they bought it for from the manufacturer, typically 35% – 55% discount from the list price. The seller would then set, what they would call, a fair price. This included their profit and overhead. For example: Huffy sells a bicycle to Walmart for $50 but the list price is $100. Walmart looks benevolent by setting the price at $75 which, theoretically, gives the consumer a $25 discount. Walmart has grown its business by competing on discounts.
Amazon wants software to be sold that way too. Currently, the boxed programs are sold to it at the vendor price, Amazon displays the List price and how much they are going to discount it. Fair enough. They’ve done a spectacular job in my opinion and have served the world well.
However, the change they are trying to implement is that the manufacturer (software developer) will have NO CLUE how much they will make off of each app. If the manufacturer wants to make a minimum price at all pricing levels, then the list price will look like a boxed set of software. This is ridiculous and has to be rethought. I understand all the people saying that Amazon knows its client base and sets the prices accordingly. No problem, let them do that, but don’t mess with the developer. We have to eat too. For us, I think Amazon is not the way the truth and the light for our apps. Amazon needs to ask “what is the minimum price you will accept for your product. What is the maximum you want for the product. What is the cheapest price you have listed it for elsewhere (if you have posted the app elsewhere).
With these facts, Amazon can vary its pricing according to the wishes of the developer. Everyone wins. Just like Steven Covey and Zig Ziglar want (Habit 4). The developer needs to create a budget and project sales. When the sales numbers come in, it will be a mess by having the numbers all over the place. Also, a high level of trust needs to be had. For instance, not that I do not trust Jeff Bezos and his crew, but just imagine for a second that Amazon needed to “make its numbers”. Couldn’t they say that various apps didn’t sell for $2 they had sold for $1 because they priced it according to Christmas pricing, or some other promotion? The developer has to take Amazon’s word for it. In the Apple app store, you always know what it sold for no matter what. You change the price to reflect sales, trends, etc…
I believe Amazon needs to rethink how this all works because all the business books I have read (I bought them from Amazon) say that one needs to control their costs, their pricing, and their business. Amazon’s app store pricing gives the developer no control.