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Amazon And The Number Genie: Prime Shipping's Freaky Fate

Jan 30 2014, 11:12pm CST | by

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Amazon And The Number Genie: Prime Shipping's Freaky Fate
 
 

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Amazon And The Number Genie: Prime Shipping's Freaky Fate

One of the quirkiest prices in America — Amazon.com’s $79-a-year charge for free shipping — is  likely to take another odd twist.  Blame it on the number genie, particularly Amazon founder Jeff Bezos’s delight in prime numbers.

A brief bit of business history is in order.When Amazon in 2004 set up the free-shipping program, known as Prime, Bezos and his team did some rough modeling that could have pointed them toward a $75 or $80 price as optimal. But Bezos picked $79 instead, because 79 is a prime number. (Get it!?)

That $79 price has held firm for nearly a decade. But now Amazon in its latest earnings call signaled that it is likely to raise Prime’s yearly fee by $20 to $40, because of rising shipping costs.

Could Amazon switch to $99 a year? Not likely. After all, 99 isn’t remotely prime: it’s the product of 3, 3 and 11. Settling on a new price of $119 would betray Bezos’s sense of numerology, too. (It may take Americans a moment to realize that 119 isn’t prime, but every Finnish schoolgirl knows that 119 is the product of 7 and 17.)

So if Amazon wants to keep Prime prime — which seems like a near certainty — the only workable options within the new price band are $101, $103, $107, $109, and $113.

We will know how Amazon handles this odd dilemma soon enough. Customers had better enjoy the new price while they can. If Amazon needs to roll out an additional price increase down the road, the next stop on the Prime Number Parade is $127.

Source: Forbes

 

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