Amazon Prime Membership Price Increasing For Everyone
Amazon.com Inc. (NASDAQ: AMZN) is increasing the price of its annual Prime membership program by $20, from $99 to $119. The price increase will take effect on May 11 for new subscribers and on June 16 for renewals of existing accounts. Amazon has charged $99 annually for Prime since 2014. Before that, the cost of Prime was $79 per year.
In January, it increased the price of its monthly Prime membership from $11 to $13, with monthly members now paying $156 to have the service for a year. Also in the last year, Amazon announced a program to give consumers on welfare or food stamps a 45 percent discount on Prime service and a 50 percent discount for Medicaid recipients.
Prime has become indispensable for many households. Amazon announced last week that it has 100 million Prime subscribers around the world. CFO Brian Olsavsky told investors during the company’s quarterly earnings call, “The value of Prime to customers has never been greater. And the cost is also high, as we pointed out especially with shipping options and digital benefits, we continue to see rises in costs.”
Amazon has invested heavily to grow the benefits of the subscription. The program includes perks such as two-day shipping and access to video and music streaming libraries. Amazon has used Prime to cater to customers looking for restaurant deliveries, unlimited photo storage, and access to ebook rentals. The perks also include 70 films available exclusively on Prime Video and free two-hour grocery delivery from Whole Foods Market, which it acquired last year for $13.7 billion, in 10 cities across the U.S.
The company spent $4.5 billion on content last year, both to license programming from other networks and to create its own originals. Amazon recently spent $250 million for the rights to a Lord of the Rings television series and has renewed its deal with the NFL for the streaming rights to the Thursday Night Football programming package.
Amazon now needs to ensure Prime is financially viable while continuing to invest in the features that make the service so popular. The company’s announced this week that its first quarter sales were up 43 percent to $51 billion. If all of its current customers renew at the higher price, that would be an additional $12 billion dollars added to Amazon’s coffers.