tag:blogger.com,1999:blog-8152901575140311047.post7069398750934432214..comments2018-10-23T01:59:30.042-04:00Comments on Musings on Markets: Deconstructing Amazon Prime: Loss Leader or Value Creator? Aswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8152901575140311047.post-69939610769378496012017-10-26T05:49:32.350-04:002017-10-26T05:49:32.350-04:00Hi Aswath, regarding your estimate average price p...Hi Aswath, regarding your estimate average price paid by Prime members globally, BloombergGadfly reports estimates from Morgan Stanley more around 88$ gadfly/articles/2017-02-14/amazon-prime-numbers-a-hint-of-the-secret-formulaBeppaunhttps://www.blogger.com/profile/05026203716442633630noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-77232779344185636942017-10-21T15:50:02.864-04:002017-10-21T15:50:02.864-04:00VKP,
You are right & I was double counting. Fi...VKP,<br />You are right & I was double counting. Fixed now(I think)Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-48240417049601821952017-10-21T15:49:09.261-04:002017-10-21T15:49:09.261-04:00Aditya,
I start with the total number of users but...Aditya,<br />I start with the total number of users but I then estimate the number of new users by multiplying by 2.25% (set equal to the risk free rate = growth rate in perpetuity). It is that incremental user value that I use to compute terminal value.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-1020497481737591042017-10-17T10:12:01.432-04:002017-10-17T10:12:01.432-04:00Hi Prof. Quick qn (open to others explaining this ...Hi Prof. Quick qn (open to others explaining this as well) - If you have already used operating margins to calculate the value of a current user (which would include the marketing/acquisition cost), why is there still a need to subtract the $100 cost of acquisition for new users? If it's argued that the operating margin does not take into account cost of acquisition, should you not subtract cost of acquisition for the existing customer base as well? Thanks!VKPhttps://www.blogger.com/profile/12535955421011056619noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-10843811958801891442017-10-17T09:26:24.287-04:002017-10-17T09:26:24.287-04:00Hello professor,
I feel there is something wrong ...Hello professor, <br />I feel there is something wrong with your terminal value calcualtion for the new users. I see that you are using total number of prime members to compute your terminal value of new members!<br />Is there a reason for using total prime for computing terminal value of new users using total prime members in year 10? Shouldn't this just be an incremental number of new members that have been added over a period of 10years rather than total prime members?<br />Let me know if i am missing something here<br /><br />Thanks<br />AdityaAdityahttps://www.blogger.com/profile/13406458703933444142noreply@blogger.com