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.