The annual price of an Amazon Prime membership will increase by 20 percent.
Amazon finance chief Brian Olsavsky said during an earnings call with analysts on Thursday that his company will raise the Prime rate to $ 119 per year from $ 99 on May 11. The new price will apply to renewals of existing Prime members starting on June 16. In addition, if your regular renewal is after June 16, you will not be allowed to prepay for another year at the current lower rate, an Amazon spokeswoman said.
That increase is only the second time that Amazon increases the annual Prime membership since it was first introduced in 2005, with the company in 2014 raising the price to $ 99 from $ 79.
Despite those few increases, boosting the Prime rate, particularly above the psychologically significant level of $ 100, could threaten future renewals and new Prime customers. Prime is one of Amazon's most important companies, which helps train loyal and regular customers who tend to spend twice as much on Amazon as non-Prime buyers. Prime's customer base in the US UU
Amazon CEO Jeff Bezos revealed last week that Prime reached more than 100 million members.
"We continue to feel that this is the best retail business and we work to do it better and better every day," Olsavsky said on the call.
He added that the rise in prices was partly to reflect the higher costs of offering Prime, which includes higher shipping rates to offer more items for two-day shipping at no additional cost and the addition of more benefits, such as transmission of programs. The number of items eligible for two-day shipments increased in the last years from 20 million to more than 100 million items in the US. UU., The company said.
The cost of the new annual membership is still a better deal than the monthly fees, which amount to $ 155.88 per year. Amazon raised the price of monthly memberships in the US UU In January at 18 percent to $ 12.99.
One way Amazon has been able to increase membership fees without increasing the annual price beyond $ 100 was by creating a number of additional subscriptions, such as Prime Pantry, Amazon Music Unlimited and Audible Channels. That effort, perhaps, was not doing enough to help Amazon recover its rising shipping costs for Prime members.
Amazon's earnings, whichwere again strong, with the publication of the second consecutive quarter of more than $ 1 billion in earnings. Shipping costs in the quarter increased 38 percent from the previous year to $ 6.1 billion.
Michael R. Levin, co-founder and partner of Consumer Intelligence Research Partners, said that Amazon is likely to get a temporary blow from the price increase, seeing some major members choose not to renew and others avoid registering.
But, with Prime experiencing strong renewal rates, more than 90 percent after the first year and even more after the second year, he said it is likely that most customers will accept the higher price.
"After registering for that second year, they have it for life, man," Levin said. "This is a pretty strong signal that they are quite confident that they will keep many members."
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