Amazon Prime’s $20 Hike Has Many Second-Guessing Their Memberships
Amazon told its Prime members Thursday in an email that the price increase it promised during an earnings call last month (CED Feb 3 p5) would take effect with their next membership renewal. The $99-per-year Prime membership fee will take effect March 20 for new members, while the increase for existing members will begin to kick in April 17 as members’ renewal dates come up, an Amazon spokeswoman told us. Thursday’s announcement gives Amazon a week to pull in new customers at the $79 rate.
Amazon’s first price increase on Prime gave customers reason to pause and reflect on the value of Prime membership. Liz Savery, a senior vice president at public relations firm FleishmanHillard, told us $79 was a price she was happy to pay in 2005 when the membership saved her “a ton” on textbooks while she was in graduate school. Now, the increase “makes me think,” she said. “At about $5 a pop for shipping, I'd have to order 20 times a year to have it pay for itself, which I won’t,” Savery said of the Prime membership. She no longer buys paper books because of her Kindle, and she doesn’t view the video content available as part of Prime Instant Video compelling enough to justify the $99 fee. Still, Savery plans to re-up when the membership renewal comes around “because of the Kindle,” she said. “I can download content to it for free because of Prime, so it’s purely a convenient content play for me now,” she said. “It’s irritating, but I have to accept it."
On Amazon’s Facebook page, where the e-tailer was hawking a digital scouting camera Thursday, Prime members used the comments section to vent about the increase. “Just got notice of the Prime membership increase,” said one rankled user. “If it holds I will cancel. $100/yr isn’t worth it for old movies and shipping charges. Lots of other places to shop.” Most comments -- primarily complaints -- took aim at the value of individual offerings such as free shipping and free video streaming within the Prime package rather than considering Prime as an umbrella package with an array of benefits.
"So you increase the cost of Prime because costs have increased,” said one user. “Problem is: Prime’s not living up to what has been advertised. I've had to wait 4-5 days for some packages that were shipped with 2-day free shipping through Prime.” Another Prime member wrote that any issues she had had with two-day shipping had been “quickly resolved” by Amazon. Though she had been satisfied with her Prime membership, she said, “Almost $100/year that is too much to shell out at once for Prime membership. I guess I will not be renewing my subscription.”
One Prime member took aim at the video offerings from Amazon. “I simply don’t want your free video services,” he said. “Can’t you just separate those costs and have a Prime service for shipping only?” Amazon didn’t respond to our question about a possible tiered pricing structure for Amazon Prime. One member compared Amazon Prime Instant Video to Netflix and said, “Netflix is better. They have more movies & TV shows that Prime is still asking you to pay for.” The member threatened to sell her Kindle, get an iPad and “I will watch Netflix on that,” she said. “That $100 is not worth it to invest in the Kindle,” she said. Another user broke out the Prime membership by month and said, “Not renewing for over 8 bucks a month. … I don’t need the movies.”
While most Facebook comments blasted Amazon for the increase, there were a few supporters. “Don’t worry, Amazon. I will definitely renew my Prime membership,” said one fan. He said he has praised Prime as the “best $80 I spend all year” since joining two years ago, and “now it will just be the best $100 I spend.” For others, he said, it’s “a question of math” on whether they watch Prime video, read e-books, own a Kindle, have an Amazon Visa card for rewards and order enough goods through Amazon that the $100 in shipping costs even out. For him, “Prime’s price is more than justified."
On whether there were any changes to the program along with the increase, the Amazon spokeswoman cited current Prime benefits including free two-day shipping on more than 20 million items, unlimited streaming of more than 40,000 movies and TV episodes with Prime Instant Video and access to more than 500,000 books to borrow via the Kindle Owners’ Lending Library. “And we're not done,” she said. “We are working to expand selection even further, as we develop additional fulfillment and transportation capacity to make the Prime program even more valuable to our members.”
Amazon’s statement on the rate hike cited increases in fuel and transportation costs along with a rise in inflation since Prime took effect at $79 in 2005. Factoring in those cost increase, Amazon said a Prime membership valued at $79 then would be worth more than $100 today.