Amazon made an announcement during its quarterly earnings call that it is going to increase the price for its Prime membership by about 20 percent for US users. So, this announcement is only for the US users and will be effective from May 11th.
Rise in the cost of annual Prime Membership
It was announced by CFO Brian Olsavsky that the annual cost of Prime membership will raise from $99 to $119, which will be effective from May 11th for new members and June 16th for existing ones. According to Olsavsky, the value of Prime has never been greater for customers. Also, with shipping options and digital benefits added, the cost is also high, and we continue to see rises in costs. The monthly Prime subscriptions were hiked by Amazon by about 24 percent, to around $156 per year. It is for users who don’t want to commit to a full year subscription, and was hiked from $10.99 to $12.99. But, it did not raise the annual price. Also, it raised the cost of the monthly Prime program for students, from $5.49 to $6.49. It also provides discounted membership of $5.99 per month, to people with Electronic Benefits Transfer cards or qualifying recipients of Medicaid. However, this price hike is the first time the company has increased its annual fee since 2014. The price was just $79 before it increased to $99 that year.
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Rise in the number of Prime subscribers
The number of Prime subscribers has increased rapidly in recent years. Last week, it was disclosed in the annual shareholders letter of Amazon by its CEO Jeff Bezos that the company has over 100 million Prime members around the world. This marked the company as the first time in which the company has ever shared subscription numbers for the platform. Amazon Prime members receive free two-day shipping, as well as free same-day and one-day shipping in many areas. Also, they have access to streaming TV shows, movies, and Amazon Prime Video, music streaming, online storage, and access to a Whole Food rewards membership. Company said that improved features are the reason for the increase. Four years ago, it had 20 million products available for two-day shipping. This number is more than 100 million today. After a strong quarter for Amazon, it made this announcement. It made $1.6 billion profit during the first three months of the year 2018. It is double of the same period in the last year.