Apple's (NASDAQ:AAPL) gross profit margins are massive, thanks to the company's incredible brand strength and pricing power. In the retail business, Amazon (NASDAQ:AMZN) is known for its cutthroat low prices. The two businesses' pricing strategies couldn't be any further apart.
This is especially evident when it comes to hardware. Apple rakes in a hefty profit upfront on its hardware sales, and Amazon sells its hardware roughly at break-even prices. But don't let Amazon's break-even strategy fool you -- it's not a weakness. A new survey from Consumer Intelligent Research Partners (via Fotune) suggests that the company benefits significantly from increased sales on its website from individuals who buy its Kindles.
In the video below, Fool contributor Daniel Sparks takes a closer look at the difference between Apple's strategy for selling hardware versus Amazon's.
Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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