In 2005, Jeff Bezos, Amazons CEO, introduced the companys Amazon, Prime membership service. For a $79 annual fee, a customer receives free (prepays might be more accurate) shipping on every single order the customer places during the year. Bezos acknowledged the Prime service would be "expensive for the company in the short term" but "more convenient for customers." Before introducing this program, you can be sure that the managerial accounting staff at Amazon went through a lot of differential analysis. Put yourself in their shoes and answer the following:

1. What would a differential analysis for adopting the Amazon, Prime model need to consider?

2. Show an example of a differential analysis for adopting the Amazon, Prime model.

3. What non-numeric considerations would need to be taken into account?

4. After reviewing the above would you have advised Mr. Bezos for or against adopting the Amazon, Prime model? Why?