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Amazon Prime Video Is Teaching Entrepreneurs about Profit

You, like millions of others might have received an email from Amazon Prime that Prime Video will no longer be “ad free”. My family asked me, “Why is Amazon doing this?”. I’m guessing millions of people are upset about it. But there’s a few things to learn from Amazon about profit.

Amazon’s email outlined all the benefits customers get from being Amazon Prime members and paying the annual $140 fee. In addition, they gave options that customers can pay a bit more per month and still get an ad-free experience.

Clearly, Amazon is not making enough profit with Amazon Prime or it wants to make MORE with Amazon Video. It’s now going to charge money to advertisers for advertising in Amazon Prime videos.

Profit, not just top level revenue is so important for business owenrs.

Mike Michalowicz writes about the importance of profit in his book, “Profit First“. Here’s what you need to know:

What is Profit?

Profit is the money that is left over after all business expenses have been paid. It is the amount of money that a business earns from its operations over a certain period, typically a quarter or a year. Profit is essential because it is the only way a business can sustain and grow over time.

Why is It Important?

It’s essential to the success of any business. A profitable business can pay its employees, invest in new equipment, and expand its operations. Without profit, a business will eventually fail. The goal of any small business owner should be to maximize their profit to create a sustainable and successful business.

How Does it Relate to Gross Revenue

Gross revenue, also known as sales revenue, is the total amount of money a business earns from its operations. Profit, on the other hand, is the money that is left over after all business expenses are paid. The difference between these two numbers is essential because it helps a business understand the true value of its operations.

How to Maximize Profit in Business

The best way to maximize profit in business is to focus on growth and efficiency. Businesses can grow in several ways, including expanding their product or service offerings, entering new markets, or acquiring other businesses. Efficiency can be improved by reducing costs, increasing productivity, and streamlining operations.

Other Factors That Impact It

Other factors that impact profit include marketing, pricing strategy, cash flow management, and customer retention. By optimizing these factors, businesses can increase their profitability, improve their customer base, and grow their operations.

Profit is the ultimate goal of every business, and it is the only way to sustain and grow operations over time. By focusing on growth and efficiency, businesses can maximize their profit, reduce costs, and improve their operations. They can also optimize other factors such as marketing, pricing strategy, cash flow management, and customer retention. With these strategies in place, small businesses can build a profitable and successful future.

Related articles:

How to Create a Small Business Budget(Opens in a new browser tab)

You Can’t Save the World by Selling Cheap. Profit Is a Must.(Opens in a new browser tab)

Here’s the email from Amazon:

Dear Prime member,

We are writing to you today about an upcoming change to your Prime Video experience. Starting January 29, Prime Video movies and TV shows will include limited advertisements. This will allow us to continue investing in compelling content and keep increasing that investment over a long period of time. We aim to have meaningfully fewer ads than linear TV and other streaming TV providers. No action is required from you, and there is no change to the current price of your Prime membership. We will also offer a new ad-free option for an additional $2.99 per month* that you can sign up for here.

Prime is a very compelling value. Prime members enjoy a wide range of shopping, savings, and entertainment benefits, including:

  • More than 300 million items are available with free Prime shipping and tens of millions of the most popular items are available with free Same-Day or One-Day Delivery.
  • Access to exclusive and broad streaming video content (including Prime Video exclusives like The Lord of the Rings: The Rings of Power, The Boys, Tom Clancy’s Jack Ryan, Citadel, The Wheel of Time, Reacher, and The Summer I Turned Pretty, as well as blockbuster movies such as Air, Creed III, Dungeons & Dragons, Candy Cane Lane with Eddie Murphy, and exclusive live sports including NFL Thursday Night Football).
  • Access to Prime Video Channels, which provides an unmatched selection of subscription channels like Max, Paramount+ with SHOWTIME, BET+, MGM+, ViX+, Crunchyroll, PBS KIDS, NBA League Pass, MLB.TV, and STARZ—with no extra apps to download, and no cable required. Customers only pay for the ones they want, and can cancel anytime.
  • The ability to use your Prime shopping benefits—like fast, free delivery, a seamless checkout experience, 24/7 live chat support, and hassle-free returns—on online stores beyond Amazon.com with Buy with Prime.
  • Exclusive deals and shopping events like Prime Day.
  • Ad-free listening of 100 million songs and millions of podcast episodes with Amazon Music.
  • Prescription medications as low as $1 per month and fast, free shipping from Amazon Pharmacy.
  • Access to unlimited eligible generic prescription medications for only $5 per month (including free shipping) with RxPass from Amazon Pharmacy.
  • High-quality health care from One Medical for only $9 per month (or $99 annually), with the option to add up to five additional memberships for the family for only $6 per month (or $66 annually) each.
  • Free two-hour Fresh grocery delivery on orders over $100 (and delivery charges between $6.95 to $9.95 for orders less than $100), and in-store savings on select groceries at Amazon Fresh and Whole Foods Market stores across the U.S.
  • Unlimited photo storage with Amazon Photos.
  • Gaming benefits with Prime Gaming.
  • More than 3,000 books and magazines with Prime Reading.
  • A free, one-year Grubhub+ membership trial valued at $120 per year, offering unlimited $0 delivery fees on orders over $12.

And, you can expect additional features and programs added in the future for our Prime members.

As mentioned above, no action is required from you. If you wish to sign up for the ad-free option, you can click here. And, as always, if you have questions about your Prime membership, you can manage your account here.

Thank you for being a valued member of Amazon Prime.

Sincerely,
The Amazon Prime team

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