Price of Amazon Prime Jumps to $99
Enter the Project Grow Challenge presented by Entrepreneur and Canon USA for a chance to win up to $25,000 in funding for your business. Deadline is Sept. 15 2015. Click here to enter.
Amazon’s popular free-shipping, video-streaming combo subscription service package just got $20 more expensive. The price hike is the first in nine years.
The Seattle-based ecommerce giant announced today that its Amazon Prime subscription will cost $99 a year, up from $79, starting on April 17. Amazon Prime members get free two-day shipping on eligible merchandise and free access to instant streaming of movies and television shows on Amazon, among other perks.
The version of Amazon Prime for students, called Amazon Student, will go to $49 per year, up $10 from $39, starting on March 20. Amazon Prime Fresh, a same-day grocery delivery service available in the Los Angeles and San Francisco metropolitan areas, will remain $299.
At the end of January, Amazon Chief Financial Officer Thomas Szkutak said the price change was possible. At the time, Szkutak said that the increased cost of transportation combined with the increased number of items being offered as part of the Amazon Prime service was forcing the company’s hand. Since the Amazon Prime program was first rolled out, the number of items eligible for free shipping has gone from 1 million to 19 million.
The price hike hits a lot of U.S. consumer pocketbooks: There are “tens of millions” of Amazon Prime customers around the world, Szkutak said. He did not would not provide exact subscription numbers or subscription numbers for the U.S. alone.
The price hike comes after Amazon, which historically runs with massive sales and ultra-thin profit margins, issued a fairly muted financial outlook at the end of January, foreshadowing a comparatively bleak quarter. Operating income was projected to swing anywhere between a $200 million loss and a $200 million profit, Amazon said.
Also, earlier this quarter, Amazon was reported to have been working to make inroads with some of its longtime retail enemies. Fashion retailers including Abercrombie and Fitch, JCrew, Neiman Marcus and a half dozen or so others have reportedly talked with Amazon. Historically, these clothing labels have not wanted to give up enough design control necessary to be part of the Amazon platform. As part of the deal, consumers would see a pair of, for example, Abercrombie pants come up in an Amazon shopping search, but then Amazon reportedly would direct the shopper to Abercrombie’s actual website.