Amazon Prime to hike US prices
February 4, 2022
By Chris Forrester
Amazon has reported Q4 revenues up 9 per cent to $137.4 billion (€119.7bn), and has also revealed that it is increasing its Amazon Prime subscription price in the US.
An Amazon Prime subscription will rise to $14.99 (from $12.99) for a monthly membership, and to $139 from $119 for an annual membership. US subscribers will be getting access to NFL’s Thursday Night Football via Prime Video beginning next season. The UK subscription price will be unaffected.
This is the first price rise since the company increased its Prime membership fee in 2018. The change will go into effect on February 18th for new Prime members. For current Prime members, the price change will go into effect after March 25th on the date of their next renewal.
Amazon blames the move on the cost of delivering services and higher shipping costs. A key Prime benefit for members is free shipping, among other elements such as streaming video and music, cloud storage, discounts at Whole Foods, and discounts on some purchases.
“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” Amazon CEO Andy Jassy said in the company’s earnings release.
Brian Olsavsky, Amazon’s CFO, told analysts on a conference call that it was difficult to use the past increases as a gauge for how the latest boost will impact Prime membership growth, due to the differences in the number of benefits and subscribers at each point.
“When we look to do price increases, we take it very seriously. And we’re always balancing the value to customers versus the cost of supplying benefits,” Olsavsky said. “There will be always be some potential loss, but it hasn’t been large in the past, and we feel pretty confident in the value proposition of our Prime offering.”
“Since 2018, Prime Video has tripled the number of Amazon originals,” Olsavsky told analysts, adding that “the continued expansion of Prime member benefits, and the increased use we have seen, along with increased costs and inflation,” played into the decision.