It was hinted by Amazon, but now it’s official: Amazon Prime customers will need to pony up an extra $20 to continue their Prime service, come renewal time.
The mega e-retailer announced the price increase in an email to Prime customers on Thursday.
The popular Amazon Prime subscription service includes free two-day shipping on millions of items, video streaming and e-book lending. The $79 Prime price tag has not been raised since the service first started in 2005.
Amazon said the increase is necessary because of fuel and shipping costs, according to CNN Money. It also cited an increase in Prime benefits.
“Even as fuel and transportation costs have increased, the price of Prime has remained the same for nine years,” the email message from the Prime team said. “Since 2005, the number of items eligible for unlimited free two-day shipping has grown from 1 million to over 20 million. We also added unlimited access to over 40,000 movies and TV episodes with Prime Instant Video and a selection of over 500,000 books to borrow from the Kindle Owners’ Lending Library.”
Prime customers will pay the higher fee if they renew their membership. New Prime customers have one week to join for $79, after which the $99 rate will apply. The Amazon student rate is increasing from $39 to $49.
CNN said the hike in Prime fees has the potential to bring in hundreds of millions of dollars to Amazon.
But the price increase could be a risky move for Amazon. A DealNews survey found that 65 percent of those polled said they would not pay more for Amazon Prime.
It’s too early to tell what impact the price hike will have, Forbes says:
Prime becomes a habit, leading to much higher spending with Amazon. The company is basically concluding that it will collect $20 extra from everyone and lose virtually no Amazon orders from anyone. If even a few percent of customers drop Prime and place even slightly fewer orders through the year, Amazon might end up losing out on enough gross margin to negate whatever benefit the extra $20 per remaining Prime customer brings.
As a longtime Amazon Prime customer who has never used the on-demand video service, I don’t know that I’m willing to pay an additional $20. Amazon already offers free shipping on orders of $35 or more, so I could make do without it.
Lucky for me, my Prime was just renewed in January, so I have 10 months to decide if the additional $20 is worth it for quick shipping.
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