Amazon built an online shopping empire around this mission statement - "to be Earth's most customer-centric company." From its humble beginnings as an online bookstore almost a quarter of a century ago to the current $763 billion mega-business, this mission appears to have served the company, and its millions of customers well.
A cornerstone of Amazon's business and customer-centric approach is its Amazon Prime subscription program. Launched in 2005, it was originally aimed to get Amazon shoppers to spend more by offering free-two day deliveries.
Through time, Amazon kept adding additional perks to keep Prime subscribers paying for the program year after year.
The value of the various Amazon Prime benefits is hard to deny - free two-day shipping on most items, access to a Netflix-like video streaming service, free music streaming, cloud photo storage, free eBooks, and a lot more. Even at $99 a year, it's arguably the best deal in the tech world!
But sadly, all good things must come to an end and that $99 price point will soon be history. In a few months, your Amazon Prime membership will be more expensive.
Amazon Prime price hike
Hold on to your wallets. In Amazon's financial results call on Thursday, the online shopping king's CFO Brian Olsavsky made a surprise announcement - Amazon Prime memberships for U.S. customers will increase from $99 to $119, a 20 percent increase!
The $20 price hike will take effect for new Prime subscribers on May 11. Current subscribers will have to shell out the new $119 renewal fee starting June 16.
The last time Amazon increased its yearly Prime subscription was in 2014. At that time, the price was increased from $$79 to $99.
Earlier this year, Amazon also increased its Prime rates for monthly members from $10.99 to $12.99. That’s an 18 percent increase and adds up to about $156 a year!
Discounted Prime Student memberships are also getting a 20 percent price hike. Their price will increase from $49 to $59.
Why the price hike?
“The value of Prime to customers has never been greater and the cost is also high, as we’ve pointed out, especially with shipping options and digital benefits,” Olsavsky said on the financial call.
“Prime provides a unique combination of benefits and we continue to invest in making this Prime program even more valuable for our members.”
He also noted that Prime is so much different now than it was in 2014.
Apparently, two-day shipping and original programming are getting too expensive for Amazon to maintain. Olsavsky said that the company is seeing rising costs in sustaining various Prime perks and the price hike will offset those costs.
The number of Prime two-day shipping item has increased from 20 million in 2014 to over 100 million in 2018. Due to this five-fold increase, Amazon has been investing in its own delivery and logistics system to complement UPS, FedEx, USPS and other third-party delivery networks.
On the entertainment side, Amazon is also spending billions to produce and create its own original programming to rival other video services like Netflix and HBO. For example, Amazon is reportedly spending over a billion dollars to produce its own "Lord of the Rings" TV series. This price tag will make it the most expensive TV show in history.
The state of Prime
Earlier this month, Amazon CEO Jeff Bezos told shareholders that Prime has now amassed over 100 million members globally. This an interesting revelation since the company has never disclosed its Prime numbers before.
The effect of a Prime membership is undeniable. Reports show that Prime members make more Amazon purchases per year than non-Prime members. Coupled with the numerous Prime perks and services available to subscribers, a $99 Amazon Prime membership is one of the best bargains out there.
Is Prime still worth it?
So is Amazon Prime still worth it at $119? It depends.
It's probably time to review your Amazon shopping habits and see if you buy enough items each month to warrant its $119 price tag. But don't forget, you're also going to miss out on Amazon's Netflix-like streaming service, cloud photo storage, free eBooks, and free music streaming if you cancel. Maybe you should try and use these perks to their full potential to justify the increase.
But I'll let you decide. With the looming $20 increase, is Amazon Prime still worth keeping? At $119 a year, does it remain to be one of the best tech deals available? Drop us a comment!
In related news, hackers have successfully fooled Amazon's Alexa to record indefinitely
The Amazon Echo and Alexa pioneered the whole smart speaker industry. But what if a clever hacker finds a flaw that can turn Alexa into a secret surveillance assistant? That's exactly what these security researchers found. Click here and I'll tell you how this hack works and how to protect yourself and your family from such attacks.