It’s going to cost you a little more to watch all those Amazon boxes pile up at your door.

Amazon said on Thursday that it was indeed raising the price of its Prime membership service to $99 from $79 — the first price hike in the program’s nine-year history, the company was careful to point out. Amazon had warned on its last earnings call that it would likely raise the price to somewhere between $99 and $119.

And, you know what? You’re probably going to still pay for it.

The price bump could be a big profit windfall for the Seattle-based retailer. In a research note this morning, RBC Capital’s Mark Mahaney projected that the increase could add $300 million to $400 million in annual operating income; Amazon recorded operating income of $745 million for 2013.

Prime subscribers can get two-day shipping at no extra charge on a wide array of goods, and can stream shows and movies from a growing media library. Amazon has also been talking to music labels about maybe creating a streaming music service, which could potentially be bundled into Prime as well.

Prime is believed to have more than 20 million subscribers, though one recent survey found that about half of the Prime subscribers polled said they would either “probably” or “definitely” not renew if the price rose to $99. Still, it’s one thing for people to say they will cancel, and another to actually cancel when the time comes. And you’d have to figure Amazon is expecting a certain percentage to not renew, but have those lost customers be offset by the increased revenue from the hike.

It is interesting to note that the average standard shipping time for Amazon deliveries in the second half of 2013 was three days and 10 hours, according to e-commerce data company Stella Service. Which raises the question: Is it worth paying $99 a year to get your deliveries a day and a half or two days earlier?

For those Prime subscribers whose membership renews on April 17 or before after, your renewal price will be $99. If it renews before that date, you’ll get one more year at the $79 price.

Gigaom is reporting that New York City customers are also now seeing an option to try out Prime Fresh, Amazon’s same-day and next-day delivery grocery service previously only available in San Francisco and Los Angeles. Prime Fresh costs $299 annually and, in other markets, includes a selection of fresh produce, other fresh groceries and about 500,000 regular products. I’ve asked Amazon if this membership option means fresh groceries are now available for delivery in New York City, but haven’t heard back yet.

One more quick observation: Whether it’s a coincidence or not, Amazon’s Prime account management page seems to be down for some customers this morning. That’s the page through which you can cancel your Prime service.




6 comments
af579
af579

I'd argue the key benefit to Amazon Prime membership is free shipping on most orders, not the 2-day shipping.


I'd also argue that how consumers say they'll react to a price increase isn't consistent with actual behavior, especially when they have to actively opt-out of having their credit card automatically charged. But yes, Amazon will likely lose some portion of their members, offset by higher fees from all who remain.  And they're likely to add some new feature to increase the perceived value, like music streaming.

Mark_Herrmann
Mark_Herrmann

"And, you know what? You’re probably going to still pay for it."


That's simply not true. 63% of current Amazon Prime users will NOT renew their subscription, according to a statistically valid survey I just ran targeted to existing prime account holders. This does not bode well for AMZN or it's effort to be profitable.

mikeschr
mikeschr

It's still worth it to me.  I get a lot of Amazon shipments.

Parzed
Parzed

Nope, I'm done.  My Prime membership is up in a few months.   After two years of Prime, I have really enjoyed the shipping but never had any use for the video feature.  Generally when I did want to use it, the things I wanted to see were not part of Prime anyway.   So much video benefit, I don't know where to start. 


If they cut video and just offered expedited shipping at a better price, that would be better for me.  


Anyway, my Amazon purchases have ramped way down lately.  Expenses elsewhere have crippled my ability to buy stuff at whimsy from Amazon.   This is not going to improve for me any time soon.  And so, I will not renew.   

Bob_jingle
Bob_jingle

"And, you know what? You’re probably going to still pay for it."

No I'm not, my membership just happens to expire today and I'm letting it expire. The cost of fuel isn't the reason for the price increase, instead its the addition to amazon prime instant video. I already have netflix and don't see the point of being force to buy another video service so I'm done.  Amazon isn't even the cheapest in town anymore.

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