Business


Amazon May Raise the Price of Its Prime Memberships by as Much as $40 Per Year

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Bad news for anyone who orders two-day deliveries of toilet paper for the thrill of it: Amazon hinted that it may increase the price of its Prime memberships by as much as $40 per year in its quarterly earnings call yesterday.

For the uninitiated, Amazon Prime membership gives you godly access to many products on Amazon.com, removing the cost of shipping for “Prime eligible” merchandise. In other words: Buy some mouthwash, and it’ll arrive at your door in two days, free of charge.

There are fringe benefits, too: Want to read an ebook on your Kindle? You’re able to access it free and instantly from a vast lending library. Ditto when it comes to streaming shows via Instant Video, the site’s Netflix competitor. The annual subscription is $79 a year — a fee that hasn’t been increased in almost a decade.

During the earnings call, however, Amazon CFO Tom Szkutak said Amazon was considering a $20 to $40 price increase on Prime membership within the next year, citing a bump in shipping costs and fuel.

So even if your Prime membership went up $40, would it still be worth it? Using toilet paper as our base item, let’s calculate. It costs an average of $6.30 to ship a 12-roll package of Cottonelle over the weekend. That means you’d have to buy about 16 bundles of toilet paper a year to make a $100 price worthwhile and 19 bundles if that price ends up being $120. Of course, you’d probably buy more household items than that (especially if you’re part of a multiple-person household). And that doesn’t even take into account the $2 to $3 you’d save every time you wanted to stream something from Amazon Prime or the $6.50 you’d have to pay to buy an ebook. Meaning, chances are, even with the price increase, you’d come out fairly even, if not save money, if you ordered a good 15 to 20 household items from Amazon per year.

Even so, it’d be nice to test out your Prime usage in a month-to-month program (similar to Netflix’s), rather than paying $120 up front for an entire year, only to discover you’re not getting your money’s worth.

Szkutak wouldn’t say whether the company would consider splitting up its video streaming service on its own. Looks like Amazon’s “tens of millions” of Prime members will have to just wait and find out. In the meantime: Maybe stock up on toilet paper?

Read more at https://www.yahoo.com/tech/amazon-may-raise-the-price-of-its-prime-memberships-by-75159148234.html

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