Kindle: A Cost Savings Analysis

Update: 1/10/10: I have updated the cost analysis to reflect the lower Kindle 2 price tag of $259. That post can be found here.

With Amazon's new Kindle 2.0 having such a heavy start-up cost ($359.00), one might wonder if it is a sound financial investment. Exactly, how many books will be necessary to read in order to "break even" compared to purchasing physical books? Of course, financial concerns aside, there are plenty of other non-tangible reasons to purchase a Kindle (or any e-reader) including wasting less paper, convenience of book access, and size. I created a spreadsheet that can be easily modified to book reading preference which will illustrate some rudimentary cost savings with some basic assumptions.

Photo courtesy of Kindle 2.0 product page

Cost Savings Analysis One:

Assumptions:
Hardbacks purchased at Amazon
List price: $27.95
Hard Back discount: 40%
Kindle 2.0 start up cost: $359.00
Equivalent Kindle book price: $9.99
Shipping cost: $3.99
Break even point (without shipping): 53 books
Break even point (with shipping): 34 books

Cost Savings Analysis Two

Assumptions:
Paperbacks purchased at Amazon
List price: $7.99
Kindle 2.0 start up cost: $359.00
Equivalent Kindle book price: $6.39
Shipping cost: $3.99
Break even point (without shipping): 65 books
Break even point (with shipping): 225 books

One thing to keep in mind is the numbers proposed should be considered averages or assumptions. Obviously, it also depends on book buying patterns. I, for one, rarely buy hardback books. I may work on my spreadsheet more if I have nothing better to do than create Excel formulas that would project semi-random purchases of hardbacks (or paperbacks).

Food for thought.

As a side note, AMZN stock is currently at $63.86, thus my hypothetical investment would have yielded me a net profit of $1553 so far.

Good reading,

Plants and Books