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Amazon.com Senior Product Manager Interview Question

I interviewed in Seattle, WA and was asked:
"How do you think Amazon may have come up with the $80 fee for the Amazon Prime membership program? - this is a classic pricing question."
Tags: analytical, product marketing
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Answer

Part of a Senior Product Manager Interview Review - one of 4,640 Amazon.com Interview Reviews

Answers & Comments

1
of 4
votes
This is a classic pricing question. Remember customer-centric approach - willingness to pay etc.
- Interview Candidate on Jan 24, 2012
2
of 2
votes
this is mostly an expected value question. you expect, from historic data, a certain subset of people to make so many purchases from amazon. with expedited shipping, it makes sense that those people would increase their spend through amazon for secondary items such as gifts for friends/family that need to be shipped. the $80 should at least cover the expense of shipping costs, but the increase in demand and sales from that increase should even further outweigh the cost of shipping for amazon. there is also another special subset of people that may not realize their entire $80 cost to amazon, and any difference is strictly profit.
- engineer on Aug 10, 2012

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