Amazon to Increase Prime Subscription Service Fee in The U.S.

The Amazon Prime Subscription Service charge will be increased by 20% in the U.S. starting from May 11. Now, a new customer will have to pay $119 a year for the shipping and entertainment membership program, up from $99 today. However, this increased annual fee will apply to existing Prime members starting with renewals on June 16.

This is the second time Amazon has increased the cost of its annual Prime membership since it was first introduced in 2005. Amazon last raised Prime’s fee in 2014, when it cost customers $79 a year.

“Prime’s increase to $119 per year could generate an incremental $800 million in revenue for Amazon over a 12-month period, based on assumptions that there are 60 million members in the U.S. and that 70% are on the annual plan”, according to Cowen & Co.’s John Blackledge. The analyst raised his target on Amazon stock from $1,700 to $1,900 per share.

Amazon Prime is very popular in countries like U.S., Canada and India. At present, there are more than 100 million paying customers for the Prime program. The program offers free two-day shipping, as well as free same-day and one-day shipping in many areas. The prime members also have access to streaming movies, TV shows and Amazon Prime Video, online storage, music streaming and access to a Whole Food rewards program/membership before standard Amazon customers.

In efforts to bolster its Prime package, Amazon has been heavily investing. It has doubled down on investing in original content and sports streaming, pouring $4.5 billion on non-sports programming in 2017. Further, to steal consumers away from on-demand video services such as Netflix Inc., Amazon is thereby attempting to improve its quality of service with every new step.

Meanwhile, Amazon still offers a discount to students. The company will keep that unchanged at $59 per year for an annual Prime Student membership.


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