Breaking down Amazon Prime

am an Amazon Prime member and I never cease to be amazed at the value that I get for the $99 that I pay as a membership fee. In addition to free shipping, I get access to Amazon Media and Kindle books. In October 2017, I was joined by 85 million other Prime members who also felt as I did, and the open question is whether Amazon Prime is a loss leader for Amazon, intended to create benefits elsewhere or a value creator for Amazon. I use the user-value model that I created for Uber to value Amazon members and conclude that Amazon Prime creates $62.2 billion in value for the company. I confess I make lots of assumptions along the way, but you are welcome to disagree. Spreadsheet: http://www.stern.nyu.edu/~adamodar/pc… Blog Post:

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About the Author

Aswath Damodaran
Please note that I do not read comments posted here, nor respond to messages here. I don't have the time. If you want my attention, you must seek it directly at my blog. Aswath Damodaran is the Kerschner Family Chair Professor of Finance at the Stern School of Business at New York University. He teaches the corporate finance and equity valuation courses in the MBA program. He received his MBA and Ph.D from the University of California at Los Angeles. His research interests lie in valuation, portfolio management and applied corporate finance. He has written three books on equity valuation (Damodaran on Valuation, Investment Valuation, The Dark Side of Valuation) and two on corporate finance (Corporate Finance: Theory and Practice, Applied Corporate Finance: A User’s Manual). He has co-edited a book on investment management with Peter Bernstein (Investment Management) and has a book on investment philosophies (Investment Philosophies). His newest book on portfolio management is titled Investment Fables and was released in 2004. His latest book is on the relationship between risk and value, and takes a big picture view of how businesses should deal with risk, and was published in 2007. He was a visiting lecturer at the University of California, Berkeley, from 1984 to 1986, where he received the Earl Cheit Outstanding Teaching Award in 1985. He has been at NYU since 1986, received the Stern School of Business Excellence in Teaching Award (awarded by the graduating class) in 1988, 1991, 1992, 1999, 2001, 2007, 2008 and 2009, and was the youngest winner of the University-wide Distinguished Teaching Award (in 1990). He was profiled in Business Week as one of the top twelve business school professors in the United States in 1994.