This morning, Amazon Prime members started getting word on the expected price increase on the service. For months it had been speculated that the service, which includes free two-day shipping on many items as well as access to a growing library of on-demand TV shows and movies, would soon cost more than the current price of $79 per year. Today's emails confirm that the company is indeed raising the cost of a 1-year Prime membership by $20.
From the email:
We are writing to provide you advance notice that the price of your Prime membership will be increasing. The annual rate will be $99 when your membership renews on [date].
Even as fuel and transportation costs have increased, the price of Prime has remained the same for nine years. Since 2005, the number of items eligible for unlimited free 2-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.
"The question is: are there enough existing Prime customers willing to shell out more cash for the same service? Potentially, but that's not a risk worth taking," said Natalie Berg, Global Research Director at Planet Retail, in an email. "Amazon is already deeply embedded with its shoppers, but they will have to justify this price hike by providing additional value to customers. One way of doing this is by forging relationships with established retail brands that are currently unavailable through Amazon. As we have seen with other membership-based retailers such as Costco, provided that the value proposition is maintained and innovation remains at the forefront, then retailers can raise membership fees without any significant spike in customer attrition."