In the midst of reporting a blowout first quarter, Amazon announced the first price hike for Prime’s annual membership since 2014, citing rising fulfillment costs as well as the value of the service that now reaches 100 million members worldwide.
As of May 11, new Prime members will be charged $119 per year, up from $99, while existing members will have until June 16 to renew at the current level. This change was signaled back in January, when Amazon raised the monthly rate for Prime from $10.99 to $12.99.
Analysts and observers said the move won’t materially affect Prime’s membership based on the program’s stickiness and deep infiltration into the fabric of consumers’ lives. Doing quick math, a $20 increase equals $2 billion in incremental revenue just on Prime subscriptions alone, assuming no falloff.
“The value of Prime to customers has never been greater,” said Amazon CFO Brian Olsavsky on the company’s earnings call. “And the cost is also high. As we pointed out especially with shipping options and digital benefits, we continue to see rises in costs. … Prime provides a unique combination of benefits, and we continue to invest in making [it] even more valuable for…