We all love our Amazon Prime. Free shipping, movie and streaming perks, sports programs as well as many other benefits. It’s the go-to for all shopping. However, come February 18, the cost of Prime memberships are climbing from $12.99 to $14.99/per month. And this means that some members will be paying $180 annually.
If you’re feeling a bit salty about this, let’s weigh the pros and cons of the price hike. Amazon puts billions of dollars into the company in order to guarantee fast shipping and on-time deliveries. This is especially important in today’s world when there’s a plethora of supply delays and labor shortages.
Recently, Amazon Inc. announced that annual memberships would be raised $20 to make a total of $139. That’s if you pay for a full year at one time. Those who pay monthly as opposed to annually will pay an additional $40. But in 2016, the company’s Prime program announced the monthly payment option to help those who are lower to middle income. And consumer researchers said that even though they are paying more, retention rates are still high. That’s due to Amazon’s customer service, they said.
“Even though monthly members pay somewhat more on an annual basis, members like that they have a smaller cash outlay and the perceived flexibility,” said Josh Lowitz, Chicago-based research firm CIRP’s co-founder. “Despite the option to pause and re-start monthly membership, our data suggests that only a very small percentage truly cherry-pick their Amazon Prime months.”
First Amazon Prime Price Increase in Four Years
Further, this is the first time there’s been an increase in the Prime program since 2018. According to Bloomberg, Amazon’s investors “welcomed the increase,” saying that the company recently added millions of subscribers and don’t see a potential for losing a significant amount of customers.
“Amazon has historically sold the increase in Prime to consumers by saying ‘we have much more and much more items,’” said Tom Forte, a senior research analyst at D.A. Davidson & Co. “They’re spending billions more on content than they were four years ago. I think there’s a strong case to make for price increases. I think there’s a compelling case that the retention rate will still be high.”
While the price change will occur on Feb. 18 for new subscribers, it will change for those who are renewing their memberships after March 25. And data from 2021 says there are currently 172 million Amazon Prime subscribers, with 60 million of those being added in 2020 and 2021. The company as well as researchers don’t believe the price hike will affect too many individuals’ use of the program.
And while their are some families that are considered on the wealthier side, Amazon Prime is mainly used by those whose household income is between $55,000 and $70,000.