The Crazy Stat That Explains Why Amazon Kindles Are so Cheap

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Dec. 17 2013 1:06 PM

The Crazy Stat That Explains Why Amazon Kindles Are so Cheap

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Kindles are cash cows for Amazon.

Photo by YASUYOSHI CHIBA/AFP/Getty Images

This post originally appeared in Business Insider.

These days, you can buy a new Kindle e-reader from Amazon for $49. Meanwhile, Amazon's Kindle Fire HDX with an 8.9 inch screen costs $379—much cheaper than a comparable $499 iPad from Apple. How and why does Amazon charge so little for its gadgets? Both questions are answered with one single stat.

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During a single year, Kindle owners spend, on average, $443 more buying stuff from Amazon than the average Amazon shopper who does not own a Kindle.

Consumer Intelligence Research Partners derived that stat from a survey survey of 300 subjects who made a purchase at Amazon.com in the three-month period ending November 15, 2013. CIRP estimates that Amazon Kindle device owners spend approximately $1,233 per year buy stuff from Amazon, compared to $790 per year for other customers.

"Another way to look at Kindle Fire and Kindle e-Reader is as a portal to Amazon.com," said Mike Levin of CIRP, in a press release put out to announce the study results. "Kindle Fire provides access to everything Amazon sells, while Kindle e-Reader has become the way that Amazon customers buy books, Amazon’s original product line."

Amazon sells Kindles cheap—perhaps at a loss—because it knows getting a device into a customers hands means that customer will spend an extra $4,500 at Amazon over the next 10 years.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

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