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Amazon may raise the price of its Prime membership by up to $40 for U.S. customers, the company said today during its quarterly earnings call.
Amazon’s Prime membership is an annual subscription that gives frequent shoppers “free” 2-day shipping on any item sold through the retail giant or one of its affiliate sellers. Prime members also gain access to Amazon’s Kindle e-book library-lending program and the Prime Instant Video service, which contains a collection of movies and TV shows that members can stream for free. Membership currently costs $79 per year, and the company hasn’t increased the price in nearly a decade.
During the earnings call, the company said it was looking into boosting the price of Prime membership by $20 to $40 in the next year or so. Amazon said the reason for the increase has to do with rising costs of shipping items as well as the fuel cost associated with it.
It’ll be interesting to see how customers react to a price increase. A $120 annual fee for Prime may turn off those that are only occasional Amazon shoppers. That’s assuming the company isn’t successful in making its Prime Instant Video and library-lending services more appealing on their own. However, if it can make Prime Instant Video as appealing as a Netflix subscription, consumers may not get sticker shock.
One possibility is that Amazon switches from charging annually for Prime, to charging either monthly or quarterly. My guess is that Amazon has distanced itself from this option because it makes it much easier for customers to compare what they purchased over the month versus the cost of membership.
Amazon CFO Thomas Szkutak shied away from whether the company would be open to breaking off its video service as a standalone subscription during the earnings call. I can’t imagine this would ever be an option since the video service’s main purpose is to get more people signed up for Prime, as VentureBeat previously reported. (I could possibly see the company breaking out an option where you might pay less for a membership that gives you only free 2-day shipping.)
The company didn’t offer an exact date for when Prime membership prices would increase.
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