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For my birthday, I wanted a cookbook. So I went to Barnes and Noble and selected it: $40.

Before I got the register I checked it on Amazon: $20.

I started price matching every single cookbook I was interested in and collectively, i could save 60% on Amazon.

So why doesn't B&N just lower their prices already?

Doesn't it make sense to sell 10 products at 0.50 cents each than to not sell 10 products at 1.00 dollar?

Isn't that how that guy who owns all those Family Dollar stores is able to bank? He makes a nickel to a dime for every product he sells but sells many products that he is now banking it?

USNews stated in an article that B&N themselves stated that their prices are so high because they wanna provide for income for their authors and prevent Amazon from becoming a monopoly. Pardon my French, But that sounds like bologna!

Furthermore, they don't price match. Not even with their own online website.

Is B&N slowly slitting its own wrists? Are these stubborn CEOs who just don't want to face reality?

Or is there some economic strategy here? Like they're waiting out something?

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4 Answers 4

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Kling's maxim: Price Discrimination Explains Everything

Who are the sorts of people that purchase at Barnes & Noble? Less price elastic buyers, like those that are purchasing a gift, those less comfortable with buying online, those that value in store recommendations and assistance, and those that just like the in store experience. Barnes & Noble wants to maximize profits, not maximize revenue. Selling to more price sensitive buyers like you means also lowering prices for less price sensitive buyers.

Say the cookbook costs Barnes & Noble \$15 to buy. If they set the price at \$20 they make \$10 of profit selling one copy to you and one copy to the price inelastic buyer. If they set the price at \$40 they make \$25 in profit selling just one copy to the price inelastic buyer.

In summary: Barnes & Noble targets buyers willing to pay high prices and lowering prices means making so much less per unit sold that they cannot make up the lost profits on higher quantities

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Answer above assumes every buyer gets the same price on a given product. Amazon doesn't work that way. You price check over time, and Amazon isn't stable. Hard to do that in a store. Amazon also knows when I go back to buy and many products have a higher price when I return. If I don't buy at that higher price, it magically drops a week later. And I get an email reminding me of the price cut (back to the original offering price).

A physical store can't do dynamic market pricing like that.

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According to the Authors Guild, Amazon "routinely takes a loss" on book sales to ensure market domination. https://www.authorsguild.org/industry-advocacy/amazons-taking-another-bite-publishing-pie. This and other answers probably have bearing on the Amazon vs. Barnes and Noble price differences.

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First, it is about price discrimination, it can mean many things, e.g. consumer not comparing the price , conveniences, branding, logistic capabilities, etc. Additional marketing is to promote the perception of price discrimination. Depends on the contracts, author may or may not get additional royalties from additional books sold.

Second, Amazon business model are more than selling stuff. E.g it is also collecting and selling logistics data, cutting deals on delivery charges, rearranging supplies deals, etc, by skimming huge amount of data and apply correct strategy, they can still making profit than doing the conventional "price differences" sales.

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