Well, maybe they will end up sharing it with Walmart.
I need to purchase a spare calculator. My preference for finance is the HP-10bII. Not very expensive, but it does a great job and is allowed for use on the various professional exams.
I figured I would drive to Office Max, the closest office supply superstore, and buy one. To ensure they carried that calculator, I took a look on their website. It was there at a price of $36.99. So far so good.
I have an Amazon Prime account, so I receive free 2 day shipping on many items. I decided to check Amazon for the HP-10bII. Exact same calculator, but only $24.76 at Amazon with free shipping. A saving of 33%. And there were no specials going on when I checked. Scary.
To see if Office Max was insane I reviewed the websites of Office Depot ($34.99), Staples ($36.99), Walmart ($29.98), and Hewlett Packard ($29.99). Not even HP itself could match Amazon on price.
Who do you think received the sale?
From this, a few take-aways:
One, if you are in business and are selling the exact same product as a competitor, you should probably sell it for the lowest price if you want to make the sale. This is especially true in the internet age where people can shop hundreds of stores simultaneously from the comfort of their homes.
Two, if you do sell for a higher price you had better make certain that the customer believes you offer something extra for that higher price. Free shipping, installation, better warranty, or other factor that differentiates you from the pack.
With services like Amazon Prime and a simple return policy, Amazon negates the possibility of differentiation for many companies.
Three, if you are in business, always try and create a product that cannot be exactly matched by others. If you can make your product or service even slightly different than others, you can possibly justify a greater price.
With calculators, the HP-12C and the Texas Instruments BA II Plus essentially perform the same functions as the HP-10bII. However, because there are a few differences between the calculators, one can price them differently. Is there enough value in the HP-12C to warrant being twice the price of the 10bII? I have no idea. Some will say yes, others no. But as they are not the exact same machine, there is room for debate.
Four, is Amazon a good investment since they often have the best prices and should therefore get the most customers? Hard to say. There is much, much more to being a good investment than simply selling products at the lowest price.
But we shall save that discussion for another day.
