These Amazon Prime Members Will Pay $180 a Year When Amazon Raises Subscription Price
Amazon has grabbed plenty of headlines for raising the price of its Prime services this year to help the online retail and entertainment giant deal with high inflation. Most of the focus has been on the hike to its yearly subscription, which will rise by $20 to $139. But while that price has put some members in a bad mood, it’s a bargain compared to what others will pay.
Slightly more than half of Prime members will end up paying a much higher price — nearly $180 for a full year. That’s because these customers pay monthly fees for the service rather than a one-time fee every year — and the monthly fee is rising to $14.99 from $12.99, Bloomberg reported. Multiply $14.99 by 12 months and the total is $179.88 for a year of Amazon Prime.
Amazon announced the new Prime rates last week — the first hike to the service since 2018. The new price goes into effect on Feb. 18 for new members and March 25 for existing members, Entrepreneur reported. In addition to getting free expedited service of package deliveries, Prime members can access movies, streaming shows, sports programming, music and games, and they receive free photo storage and access to a selection of Kindle e-books, among other perks.
Although some Prime customers have pushed back against the higher rates and urged others to cancel their memberships, analysts don’t expect Amazon to lose many customers. The company actually added millions of new subscribers after previous price increases.
“Amazon has historically sold the increase in Prime to consumers by saying ‘we have much more and much more items,'” Tom Forte, a senior research analyst at D.A. Davidson & Co., told Bloomberg. “They’re spending billions more on content than they were four years ago. I think there’s a strong case to make for price increases. I think there’s a compelling case that the retention rate will still be high.”
Amazon began offering monthly subscriptions in 2016 to attract more middle- and low-income customers who found it easier to afford smaller monthly payments than a single yearly payment — even though they end up paying more in the long run. Today, about 52% of subscribers pay monthly, Bloomberg noted, citing data from Consumer Intelligence Research Partners.
Nearly all (97%) of Prime’s monthly subscribers renew their subscriptions each year, which is only slightly behind the ratio of yearly subscribers who renew (99%).
“Even though monthly members pay somewhat more on an annual basis, members like that they have a smaller cash outlay and the perceived flexibility,” CIRP co-founder Josh Lowitz told Bloomberg. “Despite the option to pause and re-start monthly membership, our data suggests that only a very small percentage truly cherry-pick their Amazon Prime months.”
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