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Amazon considering raising price of Prime service by up to $40

Written by Andre Yoskowitz (Google+) @ 30 Jan 2014 22:32 User comments (27)

Amazon considering raising price of Prime service by up to $40 Amazon has said today that it is actively considering raising the price of its popular Prime service by up to $40.
The service currently costs $79 per year for most people and gives Amazon users free 2-day shipping on millions of items and access to the Amazon Prime Instant Video streaming service and free books via Kindle.

CFO Tom Szkutak cited higher costs of shipping goods as the reason for the potential price raise.

Amazon has never released exact figures, but there are over 20 million global Prime users. 19 million items on Amazon are Prime-eligible, and the company also offers discounts for mothers and students.

The company recently raised the price for free shipping for non-Prime members from $25 to $35, the first time that price had been raised in a decade.

Tags: Amazon Prime
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27 user comments

131.1.2014 3:18

Wow thats a lie!!!!

i had prime and most of the free shipping items on amazon where items you didn't want or should have had free shipping anyways because they where extremely light also there video service was nasty most of the videos you wanted to watch you had to buy where they where free on netflix or hulu no thank you prime is a waste of money I'm glad my service was only for 30 days

231.1.2014 9:49

A lie? Far from it from my experience.

I'm a Prime user and have used it heavily for the past 3 years. Because of my location, the $79 a year fee easily saves me what I would have spent in gas money driving. I have the UPS/FedEx truck coming to my house a couple times a week.

And items available through Prime; anything from A to Z. I've ordered a cast iron router table extension wing for my table saw. The weight; 55 pounds. Prime shipping was free two day.

I've ordered a squat rack through Prime. Weight; 151 pounds and it also came in 2 days.

And I can go on and on and on.

Really then best part for me is not the free 2 day shipping. It's the free returns if there's a problem. Free as in no restocking fee AND free return shipping.

But.... with all this being said, if Amazon is considering raising their Prime membership by 50% then I would cancel my membership and just revert to the free super-saver shipping.

331.1.2014 10:35

Like bhetrick, I have used Amazon Prime heavily for several years and really like the service. I have used both the Prime Video service and the Prime Shipping so I feel like I have certainly gotten my monies worth. However, I am not sure that it would be worth a 50% increase in price so I will have to take a serious look at it before renewing my membership.

431.1.2014 10:41

I managed to get into a $40 prime membership with a .edu email. I wonder if the prices raise for that if it will go up an even $40 for $80 total or again split the full cost at $60 total.

531.1.2014 10:43

I have my work pay for prime since we get a ton of stuff on Amazon. But for me? The only real advantage to getting prime is the streaming, the free kindle books, and the fact that you don't have to wait until your order is at least $25 to get free (2-day) shipping.

Yeah, if they double the price I wouldn't recommend it. Just wait to bundle your orders to get free super-saver shipping. Their streaming service is nothing to write home about. Same stuff that's on Netflix but not as big as netflix selection.


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631.1.2014 11:29

I mostly used it for streaming. Now I have Netflix as well I haven't used it in a while. It goes up $40 I don't think I'll be renewing.


Just my $0.02,

dEwMe

731.1.2014 12:30

Big mistake Amazon, your Prime service is great, but $80/yr. is the limit. Other companies have tried the membership discount thing and failed miserably. The only reason Amazon is successful at it is because of the 2nd day shipping (usually ends up being 3 days), and the fact that they have virtually everything. They seem to be forgetting Ebay, which also has everything, and tons of free shipping deals, Plus money back on all purchases. Right now Amazon has one of the few sucessful member subscription services, but I think they are at the limit of what most people are willing to pay. Getting greedy will cost them a lot of customers.

831.1.2014 12:42

Yep, it seems as if they're getting that "oh well the customer won't care" attitude which Netflix had a couple years ago. And look how bad that bit them in the rear.

931.1.2014 13:10

Well with the price raise, if they lose 1/3 of their customers. (I think this would be a huge loss, do you think it could be larger?)

They would still be making the same amount from fees, PLUS they would have less customers constantly purchasing with free 2-day shipping.

So they would overall be spending less, and making the same amount.

However, if every customer is similar to me, I spend way over $80 worth of 2-day shipping and tv shows. They lose money on me. So if people like me stick around and they only lose the people that don't use the service enough, those people may be the only ones they actually make money on. And they are leading them away.

This message has been edited since its posting. Latest edit was made on 31 Jan 2014 @ 13:12

1031.1.2014 13:32

Originally posted by Tazer247:
Well with the price raise, if they lose 1/3 of their customers. (I think this would be a huge loss, do you think it could be larger?)

They would still be making the same amount from fees, PLUS they would have less customers constantly purchasing with free 2-day shipping.

So they would overall be spending less, and making the same amount.

However, if every customer is similar to me, I spend way over $80 worth of 2-day shipping and tv shows. They lose money on me. So if people like me stick around and they only lose the people that don't use the service enough, those people may be the only ones they actually make money on. And they are leading them away.
I think you aren't factoring in the profit they make on the items themselves. There has been many a time I bought and maybe paid a little more for an item at Amazon when I would have bought it elsewhere without the free shipping. I gotta think a lot of us have. Sure they'd make more without the free shipping but I gotta think the profit on these purchases adds up.



Just my $0.02,

dEwMe

1131.1.2014 13:56

I used to get items in two days without paying for Prime, but they started holding the orders before shipping for at least a few days on in stock items. I now have to pay for Prime just to get the service I was getting for free. I think the price increase would keep me from using Prime, and the slow shipping without it would make me shop elsewhere. I have never found the free movies or book downloads to be of much extra value.

This message has been edited since its posting. Latest edit was made on 31 Jan 2014 @ 22:40

1231.1.2014 13:58

I'm a very satisfied Amazon Prime member. The computer that I recently built had components entirely from Amazon. Even pricing out most of the components each from a separate site to get the lowest price for each product it was still cheaper to go through Amazon when I factored in shipping and tax, not to mention free shipping on returns with no restocking fees. I buy a TON of stuff from Amazon, so the Prime membership cost is spread really thin -- they're definitely losing money on me. I watch their streaming videos from time to time, but usually watch Netflix more.

I don't know if I can justify $40 more, though. Especially when they are about to open a distribution center in Florida so there goes my no sales tax benefit, too. I'll have to look at my buying habits and stats to determine if it will be worth it for me.

1331.1.2014 14:01

Originally posted by bhetrick:
A lie? Far from it from my experience.

I'm a Prime user and have used it heavily for the past 3 years. Because of my location, the $79 a year fee easily saves me what I would have spent in gas money driving. I have the UPS/FedEx truck coming to my house a couple times a week.

And items available through Prime; anything from A to Z. I've ordered a cast iron router table extension wing for my table saw. The weight; 55 pounds. Prime shipping was free two day.

I've ordered a squat rack through Prime. Weight; 151 pounds and it also came in 2 days.

And I can go on and on and on.

Really then best part for me is not the free 2 day shipping. It's the free returns if there's a problem. Free as in no restocking fee AND free return shipping.

But.... with all this being said, if Amazon is considering raising their Prime membership by 50% then I would cancel my membership and just revert to the free super-saver shipping.



Agreed!

I'm a Prime user for 5 years now and MOST items do indeed have a "prime" shipping option. Some things no..........but they often have their own free shipping.

As for those that are Prime members primarily because of the streaming......YOU"RE ALL IDIOTS!

The 2nd day shipping is the class act reason for being Prime members.....especially around holiday season. Knowing your purchases will most likely be there in 2 solid days is awesome!
This message has been edited since its posting. Latest edit was made on 31 Jan 2014 @ 14:02

1431.1.2014 17:10

I find it very hard to believe that a $20-40 ANNUAL increase ($3~ per month) will make you get rid of a service you use weekly (or multiple times per week) and saves you time and money.


1531.1.2014 17:33

I've never tried the Prime service. I mainly use the subscribe and save option for free shipping and great discounts. For one-time purchases I just wait until I have $35 in my cart and then order.

My American Express card offers a free annual membership to ShopRunner. I use that all the time, mainly with Newegg. ShopRunner is free 2-day shipping and free, no-hassle returns. Newegg usually beats/matches Amazon on the majority of electronic/computer related items I purchase.

I don't really have any need for Prime and there is always an alternative.

This message has been edited since its posting. Latest edit was made on 31 Jan 2014 @ 17:34

1631.1.2014 17:43

Originally posted by DVDBack23:
I find it very hard to believe that a $20-40 ANNUAL increase ($3~ per month) will make you get rid of a service you use weekly (or multiple times per week) and saves you time and money.
It's not a matter of the $3 a month.

It's a matter of Amazon increasing their membership fee by 50% because, as Amazon states, the rise in shipping costs yet when in fact their quality of Prime shipping has been declining over the past couple years. There's plenty of cases in Amazon's community forums.

See, with Amazon Prime comes free 2 day shipping and $3.99 next day shipping.

But without Prime you can still get free shipping (with minimum $25 purchase) but it turns in to your regular 3-7 day shipping. Just like what you can get from almost every other e-tailer on the web.

So, it's not a matter of not shopping at Amazon anymore. It's just a matter of dropping their (would be) $10 a month "shipping" membership.

1731.1.2014 19:38

Originally posted by bhetrick:
But without Prime you can still get free shipping (with minimum $25 purchase) but it turns in to your regular 3-7 day shipping. Just like what you can get from almost every other e-tailer on the web.
Isn't it free with a minimum purchase of $35? They increased it by $10 just before Christmas.
This message has been edited since its posting. Latest edit was made on 31 Jan 2014 @ 19:40

1831.1.2014 20:31

Originally posted by DVDBack23:
I find it very hard to believe that a $20-40 ANNUAL increase ($3~ per month) will make you get rid of a service you use weekly (or multiple times per week) and saves you time and money.
Very valid point. I will easily spend 10X that in shipping in just one month.

1931.1.2014 22:15

Many items on Amazon now have higher prices when they are shipped Prime. The savings is in the two-day shipping whereas when shipped from other suppliers, can take a week or more. There are always 1 or two movies I can find on the streaming site, but most are old, children's shows, or Class B movies.

2031.1.2014 22:31

One thing to keep in mind is that you have up to 5 people on the Prime membership. I have 5 people on mine and we each kick in less than $20 a year and all get free 2 day shipping. I buy so much stuff on Amazon that there is no way I would give up Prime over a $40 price raise that would be spread over 5 people. The streaming and stuff only applies to the primary member but the shipping is what we use it for. $120 a year would be a fairly high percentage raise but still way more than fair for what you get if you order a lot of stuff.

211.2.2014 10:55

I think we can all see from the responses here that, as Tazer247 notes, even if they lose some customers over this move, very likely enough will stay for them to at least break even, if not even profit from the move. It's not a given, no, but since this is already a loss-leader for them, it also makes some sense.

221.2.2014 22:27

My wife, and I have had a joint Prime account for about 3 years. It has more than paid for itself in less than 4 months, each time we renew it.

I order a lot from Amazon, and she streams free movies, books, and whatever, along with ordering stuff, once in awhile.

I would have to say that about 90%, or more, of what I order is Prime eligible.

Outside of the free 2-day shipping, the prices of most of what I get, are less, or significantly less, than other places that have the same merchandise, be it on the Internet, or a brick and mortar shop.

Outside of Amazon, I do a lot of spending, locally.


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231.2.2014 22:28

Originally posted by Bozobub:
I think we can all see from the responses here that, as Tazer247 notes, even if they lose some customers over this move, very likely enough will stay for them to at least break even, if not even profit from the move. It's not a given, no, but since this is already a loss-leader for them, it also makes some sense.
Agreed. Esp in regard to Tazer's assessment of their overall accounting. They are possibly even deliberately hoping to put people off... they certainly aren't after more membership.

Not sure I agree about it being a "loss-leader" though. Corporations have made those sort of self-serving whiny BS excuses before when we know all it's about is more profit pure and simple i.e. we were making money before, now we make more... full stop.

But others are also right... it could end up biting themselves in the backside. Judging from the posts above there's a lot of customer loyalty they're are resting their laurels on.




Just another note: I myself NEVER buy complex computer parts online anymore if I can help it. They misbehave in strange and unpredictable ways. Nothing beats being there while the shop tests the part in front of you. There are 'no-fuss' import franchises that carry all the major brands at the same or less price if you factor in shipping. Surely they exist in the US too. (I get it if you live more out of the way).

http://msy.com.au/

Its a lot easier being righteous than right.


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241.2.2014 23:47

Considering both Newegg and Tiger Direct have pretty damn good return policies (they even pay postage and waive restocking fees, if a part fails), plus many parts have free shipping as the base option, I'm not sure that'll be the best bet in the US. There really aren't very many brick-and-mortar true discount shops out there. I'm very lucky, in that my local town has TWO relatively large PC/laptop repair businesses that have pretty good prices for components, as well (they do most of their biz online).

If anyone has knowledge of a good chain of shops like Jemborg is mentioning, sing out! I'd dearly love to be proven wrong.

252.2.2014 10:49

No such thing as free shipping really.


Its a lot easier being righteous than right.


DSE VZ300-
Zilog Z80 CPU, 32KB RAM (16K+16K cartridge), video processor 6847, 2KB video RAM, 16 colours (text mode), 5.25" FDD

262.2.2014 11:38

Originally posted by Jemborg:
No such thing as free shipping really.
You could look at it that way, but then you'd also have to say that some places charge you twice for shipping.

273.2.2014 11:55

When Prime first came out it was stated that the membership fee was pure profit for them, the shipping costs were already rolled into the margins of the items being sold.

Available items has gone up as well as adding Prime Video so I'm sure things have changed but an extra $40 is pretty significant.

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