Answers Quote by Jeff Bezos
“We've done price elasticity studies, and the answer is always that we should raise prices. We don't do that, because we believe -- and we have to take this as an article of faith -- that by keeping our prices very, very low, we earn trust with customers over time, and that that actually does maximize free cash flow over the long term.”
About This Quote
Source Speech: Shareholder Letter, Amazon, 2018
The speaker argues that despite data suggesting price hikes would increase revenue, maintaining ultra‑low prices builds customer trust, which ultimately drives greater long‑term cash flow.
In simple terms: Low prices build trust, leading to more cash over time.
Key Takeaway
Prioritize trust over short‑term price gains.
Themes
customer trust
pricing strategy
long‑term value
cash flow
brand loyalty
Mood
strategic
reflective
Type
business
financial
philosophical
When to use this quote
- e‑commerce pricing
- subscription services
- new market entry
- competitive pricing
- brand positioning
Key Concepts
behavioral economics
trust economics
customer lifetime value
Questions to Reflect On
- How can a company balance low prices with profitability?
- What risks arise if trust does not translate into cash flow?
A Different Perspective
Low prices may hurt short‑term profits and can be unsustainable in high‑cost environments.
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