Amazon Prime Prices Set to Rise
Amazon announced this week that it will be increasing the price of its popular Prime service. As CNN reports, a year-long subscription will cost $119 starting May 11th for new customers while the higher price won’t affect renewing customers until June 16th. This marks a $20 increase from the previous price of $99 a year.
News of this price hike comes soon after Amazon finally confirmed that it had over 100 million Prime users worldwide. This was actually the first time the company had announced any membership numbers for the service. It should also be noted that Amazon raised the monthly subscription rate earlier this year, hiking the fee from $10.99 a month to $12.99.
During a conference call with investors, Amazon CFO Brian Olsavsky said the decision to raise the price of Prime was made because the company has added new perks to the service, including what he calls “digital benefits.” This is likely a reference to Amazon’s efforts to grow to their Prime video platform, which has resulted in them garnering Emmy and Golden Globe nominations for some of their original programming. However there are also some lesser-known digital offerings bundled with Prime, such as unlimited photo storage.
Of course the star of Prime in the minds of many customers is still Amazon’s free two-day shipping (or even faster in some markets). To that point, Amazon has steadily increased the number of Prime-eligible items over the years. According to CNN, Amazon had 20 million Prime shipping items on the site four years ago, while that number tops 100 million today.
Aside from the monthly subscription price change, the last time Amazon raised the price of Prime was back in 2014. Before that the service was only $79 a year. Since then Olsavsky says the company has seen “rises in cost” related the service, necessitating the increase.
While Amazon’s announcement that the price of Prime would be going up was surely unwelcomed among consumers, their stock price was up 7% in after-hours trading following the reveal. Although some of the site’s 100 million subscribers may call be calling it quits over the increase, the undeniable convenience of the service may make it hard for some users to part ways with it. Additionally, thanks to their Prime Video service, the $119 subscription could be compared to the price of Netflix or Hulu, with Prime actually proving to be the cheaper option for many users (not to mention the shipping element). With that, it seems that Jeff Bezos and company know exactly what they’re doing with this latest price hike and will likely still be able to grow that 100 million subscribers figure in spite of it.