Most people love Amazon, it’s fast, efficient, they have good prices, and they have a membership program called Prime which offers many benefits including free two-day shipping on any Prime eligible product on the site. It was recently announced that Amazon would be increasing the price of Prime’s membership fee from $99 to $119 per year starting in May. The last time Amazon increased its yearly Prime membership price was in 2014, when the subscription jumped from $79 to $99. Now, four years later, it’s increasing by a not-insignificant 20 percent. It’s also worth noting that Amazon also hiked the price of its monthly memberships from $10.99 to $12.99 back in January of this year.
When will the Amazon Prime price go up?
New subscribers will pay the new rate starting on May 11, but current members have another month before it kicks in. On June 16, existing members will begin paying the new $119 rate, depending on when their renewal period occurs.
Prime price hike to cover increased costs
Amazon CFO Brian Olsavsky cited a couple reasons behind the Prime price increase in a call with investors. Costs have apparently gone up due to shipping expenses as well as spending on digital content. He also claims that the program is much different now than it was in 2014, which is when the last increase happened.
Will Prime members be willing to pay more?
Well, Amazon certainly thinks so, however, a new report by DealNews which surveyed more than 6,000 people indicates that 49 percent of those surveyed will not be renewing their Amazon Prime membership due to the increased price. Meanwhile, 18 percent said they will be renewing their Prime membership despite the price increase and 32 percent said they’re not sure yet. That doesn’t look too promising for Amazon.
The one thing that stood out to me about this survey is that the site that issued it (DealNews) is a site dedicated to finding deals, so the people on it may be more frugal than most. I guess we’ll see what happens during Amazon’s next earnings call.