Amazon Raises Prime Membership to $139 a Year, Citing Shipping, Labor Costs
Last increase for the subscription service was in 2018
America’s most-popular fast-delivery service is going up in price.
Amazon.com Inc. AMZN -7.81% said Thursday that it is raising the cost of its Prime membership in the U.S. to $139 a year from $119. Customers who pay monthly will see the price increase to $14.99 from $12.99. The price bump for new members will go into effect Feb. 18, while charges for existing customers will apply after March 25.
The tech giant’s shares rose by more than 14% after the market closed Thursday after the company reported that it nearly doubled its profits in the fourth quarter. Amazon saw gains due to its investment in electric vehicle-maker Rivian Automotive Inc. and surging revenue from its cloud-computing and advertising businesses.
Some analysts said increase in price for Prime membership played a significant role in investor enthusiasm for Amazon’s results.
The subscription service has become one of the central pillars of Amazon’s success since the company launched it in 2005. Prime membership has served as a gateway for Amazon to hook customers into its varied business lines while gleaning insights into consumer habits. Amazon has an estimated 150 million Prime subscribers in the U.S., according to Digital Commerce 360.
To explain the increase, the company cited rising costs related to wages and transportation, as well as continued expansion of benefits under membership. Memberships include access to Amazon’s fast delivery service, Amazon Prime video streaming and free photo storage.
The company this year is also adding to its bundle by gaining exclusive video rights to the National Football League’s “Thursday Night Football.”
Industry analysts had speculated that Amazon was due to raise prices. The company last increased the price in 2018, after raising it four years earlier.
Amazon added 30 million Prime members both in 2020 and 2021, and the company’s retention rates after one year and two years increased. The one-year rate reached 94% in 2021 and the two-year renewal rate increased to 98%. However, the 30-day renewal rate has fallen in recent years and reached 66% in 2021, down from 74% in 2017, according to Consumer Intelligence Research Partners.