TabletsAmazon may be losing money on each tablet (and why it doesn't matter) by Doug Aamoth | @daamoth | October 3, 2011 | + Tweets Shannon Stapleton / Reuters Estimates for how much it costs Amazon to produce a single Kindle Fire tablet have started to roll in, and as CNET reports, they range roughly between $150 and $250, depending on whom you ask. UBM rounds down, speculating that the $199 Kindle Fire only costs Amazon $150 to put together. This is based on UBM's estimate that the 7-inch BlackBerry PlayBook tablet costs around $170 to build, and that the Kindle Fire appears to have similar specs as the PlayBook while halving the internal memory and cutting both cameras (video: How to buy a Kindle). On the high end, Piper Jaffray's Gene Munster estimates the Kindle Fire costs Amazon $250, which would result in a $50 loss for every sold tablet. Analysis firm IHS iSuppli’s estimate falls somewhere in the middle at a modest $210, which includes component costs totaling $191.65 along with additional manufacturing costs making up the rest. Whatever the case, Amazon's pricing strategy is good for consumers. If the company is indeed losing $50 on every tablet, as UBM suggests, that leaves the door wide open for a one-day sale between now and the holidays and a permanent price drop down the line. Even on IHS iSuppli’s estimate of $210, Amazon just needs to sell $10 worth of content to break even—not to mention, these groupings of prices will trend downward in the future. At $250, it's a bigger hole, but again, nothing content and falling component prices can't cover in due time. Aside from merely selling digital content—movies, music, e-books, and apps—let’s not forget that Amazon sells an unfathomable selection of physical goods as well. The company gives owners of the Kindle a free month after expedited shipping, Amazon Prime, in hopes that they'll use it to buy things from Amazon's online store. It's a strategy akin to the razorblade-razor model and gaming console model: break-even or lose money on the original equipment MBT shoes Denmark, so you make it up with consumables. As UBM's Jeffrey Brown says, "The real advantage for Amazon to enter the tablet space is the advantage of a direct, established, sales model on Amazon.com versus the rest of its Android competitors. They also have name recognition and a wealth of content behind that offering, which puts them on par with Apple." More: Amazon services, not price-setting, is why catching fire is disruptive 'The Playboy Club' is too hot for Salt Lake City Foreclosures are making us sick Sparring women from combat this last vestige of patriarchy