Amazon increases Prime cost to $119 a year

Andrew Cummings
April 28, 2018

The price of Amazon Prime in Canada isn't going up, despite a pending bump to the cost of the annual membership fee in the United States. On May 11, the yearly fee for Prime will go from $99 to $119. He said Prime added more members in India in its first year than any previous geography in Amazon's history.

This price increase comes four years after the last-Amazon raised the price of a Prime membership from $79 to $99 back in 2014. "And the cost is also high, as we pointed out - especially with shipping options and digital benefits, we continue to see rises in costs".

Amazon now has over 100 million Prime subscribers around the world, and over 100 million items eligible for two-day shipping.

Amazon's first-quarter profit more than doubled from a year ago, fueled by the growth of online shopping and the cloud-computing service it provides to businesses and government agencies. For many, the free shipping service alone makes having a Prime membership a no-brainer, but the perks really do make Prime a must-have. Amazon Prime members who link their subscriptions to a Twitch account benefit from ad-free viewing, a free Twitch channel subscription every month, exclusive access to free game content, and discounts on physical game preorders and new releases.

"We do feel it's still the best deal in retail", Amazon chief financial officer Brian Olsavsky said on a call with analysts. Doing quick math, assuming a 90% renewal rate for Prime members, a $20 increase equals $1.8 billion in incremental revenue on Prime subscriptions alone. Recently, the Jeff Bezos led firm introduced a facility to home delivery parcels into customer's house by using a service called Amazon Key. The company is forecasting operating income of $1.1 billion to $1.9 billion on revenue of $51 billion to $54 billion. Comparatively, Netflix costs $10 per month meaning $120 per year which aligns perfectly with Amazon's new pricing. Given the more than 100 million subscribers, this move alone will generate 2 billion dollar (more than 1.5 billion euro) per year. "Judging by the massive increase in membership since 2014, I think consumers see and appreciate the consistent value they can get from Amazon Prime".

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